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The  New 
Inductive  Bookkeeping 


-by- 


SAMUEL  H.   GOODYEAR,   A.   M. 
Joint  Author  of  the  Goodyear  Commercial  Series 

CARL  C.    MARSHALL 
Author  of  the  Learning  by  Doing  Series 

AND 


LLOYD  E.   GOODYEAR,   Master  of  Accounts- 
Joint  Author  of  the  Goodyear  Commercial  Series 


CEDAR  RAPIDS,  IOWA 

GOODYEAR-MARSHALL  PUBLISHING  COMPANY 

1913 


Copyright,  1911 
Goodyear-Marshall,  Publishing  Company 


Introductory 


The  New  Inductive  Bookkeeping  comprises  a  thorough  course  in  General  Bookkeep- 
ing-, and  Office  and  Accountancy  Methods.  The  careful  working  out  of  the  course  will  pre- 
pare the  student  for  more  advanced  work  where  special  column  books  of  various  kinds  are 
used. 

The  aim  of  the  work  is  to  present,  (1)  a  logical  and  systematic  development  of  the 
underlying  principles  of  Debit  and  Credit;  (2)  an  application  of  these  principles  showing 
the  forms  and  inter-relations  of  ledger  accounts;  (3)  a  further  illustration  of  the  principles  as 
applied  to  Journalizing;  (4)  a  progressive  series  of  sets  of  transactions,  carried  out  as  nearly 
as  possible  as  in  actual  business,  requiring  records  illustrating  fully  all  the  general  methods  of 
modern  mercantile  accounting  and  business  procedure. 

The  Text  is  bound  complete  in  one  volume,  and  Parts  One  and  Two  are  also  bound  in 
separate  volumes. 

It  is  believed  that  the  student  who  masters  this  course  will  be  well  prepared  to  do  the 
work  required  in  any  ordinary  bookkeeping  position.  THE  AUTHORS. 


4C2229 


CONTENTS-PART  ONE 

PAGE 

Study  of  Accounts 5 

Original   Entries 25 

Journalizing 27 

A  Model  Set  of  Books 31 

Set  One — Business  Practice  (Jobbing  Grocery)    47 

Set  Two — Bookkeeping  (Flour  and  Feed)    85 

Set  Two,  Supplementary — Bookkeeping  (Wood  and  Coal) 90 

Set  Three — Bookkeeping  (Produce  and  Provision)    95 

Set  Four — Business  Practice  (Retail  Grocery)    103 

Supplementary  Journalizing" Drills 122 


Elementary  Exercises 

Business  in  its  broadest  sense  is  that  which  busies  one,  generally  referring  to  the  occu- 
pation in  which  he  engages  for  a  livelihood,  as  agriculture,  manufacturing,  commerce,  art, 
or  the  professions. 

In  a  commercial  sense,  business  consists  of  the  exchange  of  values,  either  in  material, 
money,  or  service. 

A  farmer  may  raise  more  farm  produce  than  he  can  use.  A  mechanic  may  manufacture 
more  products  than  he  needs  for  personal  use.  A  laboring  man  may  be  able  to  do  more 
work  than  is  required  in  his  own  home.  Each  of  these  persons  we  have  named  has  a  sur- 
plus of  products,  skill  or  labor,  and  other  persons  in  every  community  have  need  of  their  sur- 
plus, and  they  in  turn  have  something  else  of  value  to  give  in  exchange  for  what  they  want. 

Necessity  for  Business  Records.  Many  thousands  of  years  ago  men  who  were  engaged 
in  trade  learned  that  it  is  not  safe  to  carry  on  business  without  keeping  written  records  of 
all  transactions.  The  process  of  keeping  such  records  is  called  Accounting  or  Bookkeeping. 
In  Bookkeeping,  the  records  of  business  transactions  are  kept  in  various  kinds  of  blank 
books,  each  conveniently  ruled  to  show  the  dates,  amounts,  and  character  of  the  transactions, 
and  their  results  as  they  relate  to  the  person  for  whom  the  books  are  kept. 

An  Account  is  a  list  or  group  of  items  of  money  value  under  one  heading  or  title, 
which  relate  to  that  part  of  the  business  indicated  by  the  title.  Thus  the  group  of  items 
showing  payments  and  receipts  of  cash,  is  called  the  Cash  account,  and  the  group  of  items 
showing  the  sales  and  cost  of  goods,  is  called  the  Merchandise  account.  Accounts  are  also 
kept  with  the  several  persons  from  whom  we  buy  or  to  whom  we  sell  on  credit.  The  number 
and  kinds  of  accounts  required  depend  upon  the  nature  of  the  business. 

Bookkeeping  consists  mainly  of  two  processes:  (1)  making  a  careful  and  plain  record 
of  each  separate  business  transaction  at,  or  near  the  time  that  it  occurs;  (2)  arranging  the 
several  amounts  into  various  groups  or  accounts.  As  the  student  cannot  learn  to  make  orig- 
inal records  intelligently  and  in  proper  form  without  understanding  the  form  and  nature  ot 
accounts,  we  shall  first  give  attention  to  the  latter. 

The  several  accounts  of  a  business  are  kept  in  a  book  called  the  ledger.  The  following 
cut  illustrates  the  rulings  and  entries  for  an  ordinary  ledger  account  with  cash,  or  a  Cask 
account.  The  student  should  study  this  form  carefully,  and  the  appended  explanation  of  its 
several  parts. 

Note. — In  ordinary  business,  the  cash  account  is  not  kept  in  the  ledger,  but  in  a  special  book  called  a 
cash  book.  We  have  chosen  to  illustrate  the  ledger  form  of  a  Cash  account,  however,  because  it  is  prob- 
ably  the  account  that  can  most  easily  be  understood  by  a  beginning  student. 


—5— 


NEW  INDUCTIVE  BOOKKEEPING 


FORM  OF  A  LEDGER  CASH  ACCOUNT 


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EXPLANATION 

1.  The  above  form  shows  a  Cash  account  with  records  of  four  amounts  of  cash  received 
and  three  amounts  paid. 

2.  Observe  that  the  account  is  divided  by  the  three-line  ruling  into  two  equal  parts. 
The  part  to  the  left  of  the  dividing  line  is  called  the  debit  side  of  the  account ;  the  part  to  the 
right  is  called  the  credit  side. 

3.  The  title  of  the  account,  "Cash,"  is  written  over  the  middle  of  the  page,  on  the  first 
blue  line.  The  title  is  usually  written  in  a  somewhat  larger  or  bolder  hand  than  the  other 
writing  on  the  account. 

4.  Notice  that  the  debit  and  the  credit  side  of  the  account  have  the  same  kind  of 
rulings. 

5.  An  entry  is  what  is  written  on  the  line  of  either  the  debit  or  the  credit  side  of  an 
account.   Thus,  each  entry  on  the  account  here  shown,  consists  of  the  date  and  amount. 

6.  To  debit  an  account  is  to  make  an  entry  on  the  debit,  or  left  hand  side,  of  the  ac- 
count.    Such  an  entry  is  called  a  "debit  entry,"  or,  more  briefly,  a  "debit." 

•     7.     To  credit  an  account  is  to  make  an  entry  on  the  right-hand,  or  credit  side  of  an  ac- 
count.    Such  entries  are  called  "credits." 

8.  The  total,  or  sum,  of  either  money  column  of  an  account  is  called  a  footing.  The 
difference  between  the  footings  is  called  the  balance  of  the  account.  If  the  footing  of  the 
debit  side  of  an  account  is  greater  than  the  footing  of  the  credit  side,  the  account  is  said  to 
have  a  "debit  balance."    If  the  footing  of  the  credit  side  is  greater,  it  has  a  credit  balance. 

QUESTIONS 

How  many  debits  are  there  on  the  account  here  shown? 

How  many  credits? 

How  many  entries? 

What  is  the  amount  of  the  debit  footing  of  this  account? 

What  is  the  amount  of  the  credit  footing? 

What  is  the  amount  of  the  balance  of  this  account? 

Has  this  account  a  debit  or  a  credit  balance? 

General  Purpose  of  Accounts.  There  are  four  fundamental  elements  relating  to  every 
business,  viz :    The  Resources,  the  Liabilities,  the  Gains,  and  the  Losses. 

By  Resources,  we  mean  everything  of  value  belonging  to  the  business ;  as  money,  mer- 
chandise, or  other  property,  and  amounts  owed  by  others  to  the  business. 

By  Liabilities  is  meant  the  debts  which  the  business  owes  to  others. 


PART  ONE— STUDY  OF  ACCOUNTS 


By  Gains  is  meant  any  values  received  for  which  there  is  no  further  obligation  to  pay, 
as  profits  obtained  by  selling  goods  for  more  than  their  cost,  interest  received  on  notes  or 
other  debts  owed  to  the  business,  discounts  or  rebates  allowed  to  the  business  by  others,  rents 
paid  to  the  business  for  the  use  of  property  by  others,  etc. 

The  Losses  of  a  business  include  the  ordinary  running  expenses,  as  rent,  salaries,  taxes, 
etc.,  usually  kept  under  an  Expense  account,  also  discounts  allowed  to  others,  and  interest  on 
the  liabilities  as  well  as  the  loss  sustained  by  selling  goods  for  less  than  their  cost. 

The  general  purpose  of  accounts  is  to  afford  the  proprietor  complete  information  as  to 
these  fundamental  elements. 

THE  PRINCIPLES  OF  DEBIT  AND  CREDIT 

In  the  system  of  bookkeeping  called  "Double  Entry,"  whenever  an  account  (or  ac- 
counts) is  debited,  some  other  account  (or  accounts)  is  credited  for  an  equal  amount. 

GENERAL  RULE 

1.  Debit  the  account  that  costs  or  receives  value. 

2.  Credit  the  account  that  produces  or  gives  value. 
Let  the  student  study  very  carefully  the  following: 

APPLICATIONS  OF  THE  RULE 

1.  When  the  proprietor  invests  cash  in  the  business,  we  debit  the  Cash  account,  which 
receives  the  value  turned  into  it,  and  we  credit  the  proprietor's  investment  account,  because 
the  proprietor  gives  the  Cash  to  the  business  for  business  uses. 

2.  When  we  buy  merchandise  for  cash,  we  debit  the  Merchandise  account,  because  the 
merchandise  costs  us  the  cash  paid  out,  and  we  credit  the  Cash  account  because  this  account 
gives  the  value  which  the  merchandise  cost. 

3.  When  we  pay  our  rent  in  cash,  we  debit  the  Expense  account,  because  the  rent  serv- 
ice costs  value,  and  we  credit  the  Cash  account  because  this  account  gives  the  value  which  the 
rent  costs. 

4.  When  we  buy  goods  of  Mr.  Jones  on  account,  (that  is,  on  credit),  we  debit  the  Mer- 
chandise account,  because  it  is  this  account  that  has  cost  the  business  the  amount  we  owe  Mr. 
Jones,  and  we  credit  Mr.  Jones's  account  because  it  is  this  account  that  has  given  to  the  busi- 
ness the  value  of  the  merchandise. 

5.  When  we  sell  goods  to  Mr.  Smith  on  account,  we  debit  Mr.  Smith's  account,  be- 
cause it  is  this  account  that  has  received  the  value  of  the  goods  we  have  parted  with,  and  we 
credit  the  Merchandise  account  because  it  is  this  account  that  has  produced  the  value  repre- 
sented by  what  Mr.  Smith  owes  us. 

6.  When  we  pay  Mr.  Jones  cash  for  what  we  owe  him,  we  debit  Mr.  Jones's  account 
because  this  account  has  received  value  and  we  credit  the  Cash  account  because  it  is  this  ac- 
count that  has  given  the  value  represented  by  the  payment  of  our  debt  to  Mr.  Jones. 

7.  When  Mr.  Smith  pays  us  cash  for  what  he  owes  us,  we  debit  the  Cash  account,  be- 
cause this  account  has  received  value,  and  we  credit  Mr.  Smith's  account,  because  it  is  this 
account  that  has  given  the  cash  received. 

The  logical  application  of  the  Rule  of  Debit  and  Credit  produces  the  following  results: 

(a)  The  Cash  account  is  debited  when  cash  is  received  and  credited  when  cash  is 
parted  with. 

(b)  The  Merchandise  account  is  debited  for  all  purchases  and  costs  of  goods  bought, 
and  credited  for  all  sales. 

(c)  Persons  are  debited  for  what  they  owe  us  at  the  beginning  of  the  business,  or  for 
what  we  pay  or  sell  to  them  on  account,  and  they  are  credited  for  what  we  owe  them  at  the 
beginning  of  the  business,  or  for  what  we  buy  or  receive  from  them  on  account. 


NEW  INDUCTIVE  BOOKKEEPING 


Keeping  a  Set  of  Books.  In  actual  bookkeeping,  the  first  step  in  connection  with  any 
transaction  is  to  write  a  history  of  it  in  some  book  (usually  a  Journal,  Cash  Book,  Sales  Book, 
or  Invoice  Book),  which  is  used  for  that  purpose.  This  first  record  is  called  the  original 
entry.  Afterward,  the  amounts  recorded  in  the  original  entry  are  posted  to  the  accounts 
affected. 

In  the  following  practice  exercises  in  the  use  of  accounts,  the  records  printed  in  the 
text-book  describing  the  transactions  may  be  considered  the  original  entries,  and  the  student's 
work  will  be  to  prepare  the  required  ledger  accounts,  and  make  such  entries  in  these  accounts 
as  are  required  by  the  General  Rule  for  Debit  and  Credit.  The  student's  first  step  in  practical 
bookkeeping  must  be  to  learn  to  apply  this  rule  to  the  different  accounts. 

ILLUSTRATIVE  SET  NO.  1 

CASH  TRANSACTIONS  RELATING  TO  THE  PURCHASE  AND  SALE  OF  MERCHANDISE 

The  simplest  form  of  business  is  that  in  which  goods  are  bought  and  sold  for  cash.  The 
bookkeeping  for  such  a  business  would  require  but  three  accounts,  one  with  Cash,  one  with 
Merchandise,  and  one  with  the  owner,  or  proprietor. 

The  following  set  shows  the  account  records  of  a  series  of  transactions  for  a  strictly 
cash  business.  The  forms  on  page  9  show  the  three  accounts  as  they  should  appear  after 
the  required  entries  have  been  made  for  each  transaction.  Let  the  student  read  each  transac- 
tion and  determine  the  required  entries,  working  with  deliberation  and  care  until  he  clearlv 
understands  the  rule  for  debits  and  credits,  and  can  apply  the  rule  to  all  transactions  of  this 
class. 

TRANSACTIONS 

Jan.  1,  19 — .  T.  M.  Carpenter  began  the  buying  and  selling  of  corn,  oats,  and  wheat, 
for  cash,  starting  with  a  cash  capital  of  $600. 

Note. — Assume  that  you  have  opened  accounts  with  T.  M.  Carpenter,  Investment,  with  Cash,  and 
with  Merchandise  as  shown  ,on  page  9.  As  each  transaction  arises,  name  the  accounts  to  be  debited  and 
credited,  then  refer  to  the  model  form  to  compare  the  entry  you  would  make  with  the  one  actually  made. 
Take  time  to  analyze  the  entries  carefully,  for  by  so  doing,  you  will  be  able  to  correct  at  the  start  any 
tendencies  to  error. 

Jan.     2.     Bought  for  cash  200  bu.  wheat  at  75c. 

Here  debit  Merchandise  and  credit  Cash  for  the  reasons  stated  under  "General  Rule  for  Debit  and 
Credit"  on  page  7.     Find  the  entries. 

Jan.     3.     Bought  300  bu.  corn  at  50c,  paying  cash. 

Debit  and  credit  as  in  previous  transaction. 

Jan.     4.     Bought  for  cash  400  bu.  oats  at  30c. 

Find  the  entries. 

Jan.     5.     Sold  100  bu.  wheat  at  80c. 

Find  the  entries  and  give  reason  for  each. 

Jan.     6.     Paid  cash  for  200  bu.  corn  at  45c. 

Find  the  entries,  also  those  for  each  of  the  transactions  that  follow.  Be  sure  that  you 
can  give  the  reason  for  the  required  debit  and  credit  in  each  case,  referring  when  necessary  to 
"Applications  of  the  Rule,"  on  page  7. 

Jan.  7.  Sold  for  cash  300  bu.  oats  at  35  cents  per  bu. 

"  8.  Bought  for  cash  300  bu.  corn  at  45  cents  per  bu. 

"  9.  Sold  for  cash  100  bu.  oats  at  40  cents  per  bu. 

"  10.  Bought  for  cash  200  bu.  corn  at  50  cents  per  bu. 

"  11.  Sold  for  cash  100  bu.  wheat  at  80  cents  per  bu. 

"  12.  Sold  for  cash  500  bu.  corn  at  50  cents  per  bu. 

"  13.  Bought  for  cash  200  bu.  wheat  at  75  cents  per  bu. 

"  14.  Sold  for  cash  400  bu.  corn  at  55  cents  per  bu. 


PART  ONE— STUDY  OF  ACCOUNTS 


Jan.  15.     Bought  for  cash  400  bu.  oats  at  25  cents  per  bu. 
"     16.     Sold  for  cash  all  the  grain  on  hand  as  follows : 
100  bu.  corn  at  55  cents  per  bu. 
200  bu.  wheat  at  80  cents  per  bu. 
300  bu.  oats  at  35  cents  per  bu. 

Enter  the  above  items  in  one  amount. 

It  is  now  assumed  that  Mr.  Carpenter,  having  sold  all  his  grain  on  hand,  wishes  to  know 
the  results  of  his  series  of  dealings  as  shown  by  his  accounts. 

ACCOUNTS  IN  ILLUSTRATIVE  SET  NO.  1 


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NEW  INDUCTIVE  BOOKKEEPING 


The  Cash  Account.  The  debit  side  of  this  account  shows  the  cash  received  when  the 
business  was  begun,  and  all  cash  afterwards  received.  The  credit  side  shows  all  cash  given 
or  paid.  It  is  clear,  therefore,  that  the  difference  between  the  total  of  the  debits  and  the  total 
of  the  credits  equals  the  amount  of  cash  on  hand,  or  the  balance. 

Find  the  balance  of  Mr.  Carpenter's  cash  account.  Is  it  a  debit  or  a  credit  balance? 
Could  the  footing  of  the  credit  side  of  a  cash  account  be  greater  than  the  footing  of  the  debit 
side?     Why  not? 

How  much  more  cash  is  now  on  hand  in  this  business  than  at  the  beginning? 

The  Merchandise  Account.  As  each  item  on  the  debit  side  of  this  account  shows  cost, 
the  sum  of  the  debit  items,  will  show  the  entire  cost  of  all  merchandise  received.  In  like 
manner  the  sum  of  the  credits  shows  the  total  amount  produced  to  the  business  through  sales. 
The  difference  between  these  amounts  will  show  either  a  gain  or  a  loss. 

If  the  total  cost  amounts  to  more  than  the  total  sales,  there  is,  of  course,  a  loss ;  if  the 
sales  are  greater  than  the  cost,  there  is  a  gain. 

Does  this  Merchandise  account  show  a  gain  or  a  loss?  What  is  the  amount?  Does 
this  amount  agree  with  the  gain  as  shown  by  the  increase  of  cash  on  hand? 

The  Proof  Sheet.  Since,  for  every  debit  on  the  ledger,  there  is  a  corresponding  and 
equal  credit,  it  follows  that  if  these  debits  and  credits  have  been  correctly  entered  on  the 
ledger,  the  sum  of  all  the  debits  must  equal  the  sum  of  all  the  credits. 

A  proof  sheet  is  a  form,  showing  the  several  account  titles  of  a  ledger,  the  account  foot- 
ings, and  their  totals.  Such  a  form  is  often  called  a  trial  balance,  but  the  name,  proof  sheet, 
is  more  appropriate.  A  trial  balance,  properly  so-called,  gives  the  balances  of  the  several 
accounts  instead  of  their  footings,  or  totals. 

The  accompanying  form  shows  a  proof  sheet  of  Mr.  Carpenter's  ledger.  When  the  sum 
of  the  debit  footings  of  a  proof  sheet  is  equal  to  the  sum  of  the  credit  footings,  the  ledger  is 
said  to  be  "in  balance."  If  the  sums  of  the  footings  are  unequal,  the  ledger  is  "out  of 
balance." 

Before  attempting  to  ascertain  the  results  shown  by  a  ledger,  its  correctness  should  first 
be  proved  by  means  of  a  proof  sheet. 

Note. — Only  such  errors  as  affect  the  equilibrium  or  "balance"'  of  the  ledger  will  be  shown  by  the 
proof  sheet. 

PROOF  SHEET  ILLUSTRATIVE  SET  NO.  1 


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PART  ONE— STUDY  OF  ACCOUNTS 


II 


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of  each  column,  using  for  this  purpose  a  sharp  pointed  hard  lead  pencil.  See  the  footings  on 
the  accompanying  Cash  account. 


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ILLUSTRATIVE  SET  NO.  2 


CASH   TRANSACTIONS    RELATING  TO   A   PIECE   OF   REAL   ESTATE 

The  following  transactions  require  accounts  with  Robert  Holmes,  Investment,  Cash,  and 
an  account  with  a  piece  of  real  estate  property  known  as  "No.  16  Elm  Street."  Trace  out 
the  entries  for  these  transactions,  as  in  the  previous  set,  and  be  able  to  state  the  reason  for 
each  debit  and  credit.     The  accounts  are  shown  on  page  12. 

TRANSACTIONS 

July  1.     Robert  Holmes  invests  Cash,  $3,000. 

July  1.     Bought  "No.  16  Elm  Street"  for  cash,  $2,500. 

Debit  "No.  16  Elm  St.,"  because  this  property  has  cost  $2,500,  and  credit  "Cash"  because  this  account 
has  given  value.    Find  each  entry. 

July  8.     Paid  cash  for  taxes  on  the  property,  $21.40. 

Again  debit  "No.  16  Elm  St."  and  credit  "Cash"  for  reasons  given  under  preceding  transaction. 

August  1.     Received  cash  for  rent  of  property  for  July,  $20. 

Here  we  debit  "Cash"  because  this  account  has  received  value,  and  credit  "No.  16  Elm  St."  b*eca\ise 
this  account  has  produced  value. 

August  15.     Paid  cash  for  repairs  on  property,  $13.70. 

Same  entries  as  in  transaction  for  July  8,  and  for  same  reason. 

Sept.  1.     Received  cash  for  August  rent,  $20. 

See  transaction  for  Aug.  1. 

Sept.  5.     Paid  cash  for  insuring  house,  $5.25. 

Similar  entries  to   those  made  July  8  and  Aug.  15. 

Sept.  20.     Sold  property  for  cash,  $2,750. 

Debit  "Cash"  because  this  account  has  received  the  value,  and  credit  "No.  16  Elm  St."  because  this 
account  produced  the  value. 


NEW  INDUCTIVE  BOOKKEEPING 


ACCOUNTS  IN  ILLUSTRATIVE  SET  NO.  2 


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Proof  Sheet.  Prepare  on  a  loose  sheet  of  paper  a  proof  sheet  for  this  set,  correspond- 
ing to  the  one  given  for  the  previous  set.  If  your  proof  sheet  shows  the  ledger  to  be  in 
balance,  consider  carefully  the  following: 

QUERIES 

1.  Including  the  investment,  how  much  cash  has  been  received  into  the  business  ? 

2.  How  much  cash  has  been  paid  ? 

3.  How  much  cash  is  now  on  hand  ? 

4.  How  much  has  Mr.  Holmes'  cash  investment  been  increased? 

5.  How  much  has  the  property,  "No.  16  Elm  Street,"  cost? 

6.  How  much  has  it  yielded  to  the  business? 

7.  Does  the  balance  of  this  account  show  a  gain  or  a  loss  and  how  much? 

8.  Does  this  amount  agree  with  the  increase  of  the  cash  balance? 


PART  ONE— STUDY  OF  ACCOUNTS  13 

Special  Rulings.  Special  rulings  are  required  in  many  of  the  processes  of  bookkeeping. 
It  is  very  important  for  the  student  to  learn  to  make  neat  and  clean-cut  rulings.  To  accom- 
plish this,  the  paper  must  lie  flat  so  that  the  ruler  will  press  upon  it  evenly  at  all  points.  The 
ruler  should  be  so  placed  that  the  beveled  (slanting)  edge  is  next  to  the  paper.  This  is 
necessary  in  order  that  the  pen-point  in  moving  across  the  paper  will  not  touch  the  place 
where  the  ruler  meets  the  paper,  thereby  causing  the  ink  to  flow  under  the  paper  and  make 
a  blotted  line  instead  of  a  distinct  and  even  one.  In  ruling,  press  the  ruler  firmly  with  the 
left  hand,  leaving  the  right  hand  free  to  use  the  pen. 

Most  of  the  special  rulings  required  in  bookkeeping  are  made  in  red  ink.  For  these,  a 
special  pen  is  used,  which  should  never  be  dipped  in  black  ink. 

Headings.  Ledger  accounts,  and  other  bookkeeping  forms,  require  ruled  headings 
usually  of  three  parallel  lines.     (See  the  headings  in  the  various  script  forms  in  this  book.) 

The  headings  at  the  top  of  the  page  in  blank  books  are  usually  ruled  by  machines,  but 
it  is  often  necessary  to  subdivide  a  page  by  meains  of  other  headings.  The  ledger  on  page  12 
illustrates  the  proper  method  of  ruling  these  special  headings.  Observe  that  the  rulings  are 
drawn,  not  on  the  blue  lines,  but  midway  between  them. 

Ruling  Exercise.  Take  a  sheet  of  ledger  paper  from  your  practice  paper  envelope  and 
rule  headings,  subdividing  one  side  of  the  sheet  into  four  account  spacings,  as  for  the  ledger 
on  page  12.  Follow  the  foregoing  directions,  and  observe  the  greatest  care  and  neatness  in 
your  work. 

Practice  Paper.  You  will  find  in  your  equipment,  an  envelope  marked  "Practice 
Paper."  In  this  envelope  are  three  kinds  of  paper,  (1)  ruled  ledger  paper,  for  preparing  the 
account  exercises,  (2)  journal  ruled  paper  for  proof  sheets  and  for  the  journalizing  and 
other  exercises  required  later  on  in  your  course,  (3)  ordinary  writing  paper  for  use  in  con- 
nection with  exercise  work. 

You  are  now  to  take  from  this  envelope  one  of  the  ledger  sheets,  and  rule  headings  and 
write  the  titles  for  the  required  accounts  in  the  following  exercise,  being  guided  by  the  forms 
shown  on  page  9. 

EXERCISE  ONE 

This,  and  the  subsequent  account  exercises,  are  intended  to  afford  the  student  necessary 
practice  in  applyinig  the  principles  of  debit  and  credit,  and  in  learning  the  uses  of  accounts 
and  the  process  of  deducing  results  from  them.  The  printed  transactions  for  each  set  may  be 
assumed  to  be  original  records,  the  student  dealing  only  with  the  ledger  accounts 

The  accounts  required  for  Exercise  1,  with  the  number  of  lines  allotted  to  each,  are  as 
follows :  i 

Henry  M.  Tait,  Investment 3  lines 

Cash    11  lines 

Merchandise    12  lines 

In  writing  up  these  ledgers,  the  student  is  cautioned  to  be  especially  careful  in  making 
his  records,  and  to  take  particular  pains  as  to  the  neatness  and  legibility  of  his  work.  Pre- 
cision, accuracy,  and  neatness  are  prime  essentials  in  all  good  accounting. 

Applying  the  rule  for  debit  and  credit,  enter  the  following  transactions  on  this  ledger, 
always  making  the  debit  entry  first.  Be  very  careful  not  to  enter  any  amount  on  the  wrong 
side  of  the  ledger  or  in  the  wrong  account.  Be  careful  to  enter  all  dates  correctly,  and  write 
the  current  year  (19 — )  at  the  head  of  all  date  columns.  Think  carefully  before  making 
your  entries,  and  take  especial  pains  to  have  your  figures  legible  and  neat.  Verify  all  your  re- 
sults carefully  before  entering  them. 

TRANSACTIONS 

Mar.     1.     Henry  M.  Tait  invests  cash,  $1500. 

"       1.     Bought  for  cash  200  brl.  Flour  (a)  $4.75. 
Note. — The  sign  "@"  indicates  "each"  or  "apiece." 


14  NEW  INDUCTIVE  BOOKKEEPING 

Mar.  2.  Paid  cash  for  freight  on  same,  $21.50. 

"  4.  Sold  for  cash  75  brl.  Flour  @  $5.50. 

"  5.  Bought  1000  lb.  Corn  Meal  @  V/2  cts.  for  cash. 

"  5.  Sold  for  cash  50  brl.  Flour  @  $5.60. 

7.  Paid  cash  for  freight  on  Corn  Meal,  $4.25. 

"  9.  Received  cash  for  20  sacks  Corn  Meal  @  35  cts. 

"  12.  Bought  for  cash  100  bu.  Potatoes  @  45  cts. 

"  13.  Sold  for  cash  25  brl.  Flour  @  $5.20. 

"  13.  Paid  cash  for  freight  on  Potatoes,  $7.10. 

"  14.  Bought  for  cash  150  brl.  Flour  @  $4.50. 

"  15.  Sold  for  cash  35  bu.  Potatoes  @  65  cts. 

"  15.  Received  cash  for  40  sacks  Corn  Meal  @  35  cts. 

"  17.  Paid  freight  bill  on  Flour  in  cash,  $15.25. 

"  20.  Sold  all  merchandise  on  hand  for  cash,  $1250. 

Proof  Sheet.  When  the  above  transactions  have  all  been  entered  on  your  ledger,  pre- 
pare a  proof  sheet,  using  the  same  form  except  as  to  ledger  titles,  as  that  given  on  page  10. 
Use  for  this  purpose  a  half  sheet  of  journal  practice  paper  from  your  "Practice  Paper" 
envelope. 

Should  the  footings  of  your  proof  sheet  fail  to  agree,  you  have  made  errors  in  your 
ledger  entries,  or  else  you  have  failed  to  add  either  your  ledger  accounts  or  your  proof  sheet 
correctly.  In  this  case,  go  over  all  your  work  carefully  and  if  the  error  remains  undetected, 
report  the  fact  to  your  teacher. 

If  the  agreement  of  the  footings  of  your  proof  sheet  shows  that  your  ledger  is  in  bal- 
ance, rule  up  your  proof  sheet  in  red  ink  as  shown  in  the  form  on  page  10. 

On  the  reverse  side  of  yourt  proof  sheet,  or  on  the  same  side  below  the  proof  sheet  if 
there  is  room,  copy  the  following  "Statement  of  Results,"  filling  in  the  correct  amounts  and 
hand  it  with  your  account  sheet  to  your  teacher.     If  approved,  proceed  with  Exercise  2. 

STATEMENT  OF  RESULTS 

1.  Total  Cash  received $ 

2.  Total  Cash  paid  out 

3.  Amount  of  Cash  on  hand 

4.  Total  cost  of  Merchandise 

5.  Total  amount  to  the  credit  of  Merchandise 

6.  Gain  on  Merchandise 

7.  Excess  of  cash  on  hand  over  original  investment 

EXERCISE  TWO 

This  exercise  requires  accounts  with  spaces  and  titles  as  follows: 

J.  P.  Allison,  Investment 3  lines 

Cash    11    " 

No.  25  Rose  St 11    " 

Open  the  required  accounts  on  a  sheet  of  ledger  practice  paper  as  in  Exercise  1,  make 
entries  on  the  ledger,  as  required  by  the  several  transactions,  then  prepare  u  proof  sheet  and 
the  statement  of  results,  as  in  the  previous  exercise. 

TRANSACTIONS  PERTAINING  TO  PROPERTY,  NO.  25  ROSE  ST. 

Jan.     1.  J.  P.  Allison  invests  cash,  $2000. 

5.  Bought  property  at  25  Rose  Street  for  cash,  $1850. 

"     15.  Paid  cash  for  taxes,  $12.95. 

Feb.     1.  Received  cash  for  rent  for  January,  $15. 

7.  Insured  property  for  $750,  paying  premium  on  policy,  $22.50. 

"     21.  Paid  cash  for  repairs  on  house,  $11.50. 

Mar.    1.  Received  cash  for  rent  for  February,  $15. 

"       5.  Paid  water  tax  for  January  and  February,  $2.25. 


PART  ONE— STUDY  OF  ACCOUNTS  15 

Apr.     1.  Received  cash  for  March  rent,  $15. 

"       9.  Paid  cash  for  repairing  sidewalk,  $9.25. 

"     15.  Paid  cash  for  repairing  water  pipes,  $4.50. 

May     1.  Received  cash  for  April  rent,  $15. 

"       4.  Paid  cash  for  repairing  roof,  $2.60. 

"     19.  Sold  the  Rose  Street  property  for  cash,  $2000. 

STATEMENT  OF  RESULTS 

1.  Total  cash  debits $ 

2.  Total  cash  credits 

3.  Amount  of  cash  on  hand 

4.  Cash  originally  invested 

5.  Increase  in  cash 

6.  Total  cost  of  No.  25  Rose  Street. 

7.  Total  yielded  by  the  property 

8.  Gain  on  the  investment 

EXERCISE  THREE 

In  the  work  of  the  student  thus  far,  only  cash  transactions  have  been  introduced.  We 
are  now  to  deal  with  transactions  involving  persons. 

Personal  Accounts,  are  accounts  with  persons,  firms  or  corporations.  They  are  required 
when  we  sell  to  or  buy  from  a  person  "on  account"  (that  is  "on  credit"),  or  when  we  pay 
to  or  receive  from  a  person  anything  on  account. 

For  an  application  of  the  General  Rule  of  debit  and  credit  to  personal  accounts,  see 
page  7. 

The  accounts  and  spacing  required  for  this  exercise  are  as  follows : 

Joseph  Watson,  Investment 3  lines 

Cash    7    " 

Merchandise    6    " 

C.  R.  Jones 6    " 

TRANSACTIONS 

May    1.     Joseph  Watson,  proprietor,  invests  cash,  $250. 
"       1.     Bought  merchandise  for  cash,  $150. 
"       1.     Sold  to  C.  R.  Jones  merchandise  on  account,  $125. 
"       2.     Bought  of  C.  R.  Jones  merchandise  on  account,  $75. 
"       3.     Bought  merchandise  for  cash,  $50. 
"       5.     Received  of  C.  R.  Jones  cash  on  account,  $15. 
"       6.     Sold  merchandise  for  cash,  $60. 

7.     Bought  merchandise  of  C.  R.  Jones  on  account,  $100. 
"     15.     Paid  C.  R.  Jones  cash  on  account,  $20. 
"     17.     Sold  C.  R.  Jones  merchandise  on  account,  $95. 
"     18.     Paid  cash  for  merchandise,  $71. 
"     20.     C.  R.  Jones  has  paid  cash  on  account,  $45. 
"     23.     Sold  all  merchandise  on  hand  for  cash,  $265. 
Prepare  a  proof  sheet  for  this  ledger  as  in  Exercises  1  and  2,  also  copy  and  make  out  the 
Statement  of  Results,  as  in  previous  exercises,  and  prepare  yourself  to  answer  the  "Queries" 
that  follow. 

Two  General  Classes  of  Accounts.  The  Accounts  of  any  business  may  be  divided  into 
two  general  groups,  as  follows: 

1.  Commercial  Accounts  are  those  in  which  the  balance  of  the  complete  account  shows 
either  a  loss  or  a  gain.  They  include  accounts  with  property  bought  or  sold  for  profit,  also, 
those  that  show  income  and  outlay  required  in  connection  with  the  business.  Commercial 
accounts  cost  value  to  the  business,  or  produce  value  for  the  business. 

2.  Financial  Accounts  are  those  whose  balances,  when  completed,  show  either  a  re- 
source or  a  liability.  They  include  accounts  with  cash  or  other  property  not  bought  or  sold 
for  profit,  also,  all  accounts  showing  debts  owed  to  or  by  the  business.  Financial  accounts 
receive  from  the  business  or  give  to  the  business. 


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NEW  INDUCTIVE 

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STATEMENT  OF  RESULTS 

1.  Total  Cash  debits $ 

2.  Total  Cash  credits 

3.  Amount  of  Cash  on  hand 

4.  Total  debits  of  Merchandise 

5.  Total  credits  of  Merchandise 

6.  Gain  on  Merchandise 

7.  Balance  of  C.  R.  Jones's  Account    

QUERIES 
Does  the  balance  of  C.  R.  Jones's  account  represent  a  resource  or  a  liability? 
Is  this  account  a  Commercial  or  a  Financial  account?     Why? 

Has  the  cash  on  hand  been  increased  or  diminished  since  Mr.  Watson's  original  invest- 
ment was  made? 

Is  the  Merchandise  account  a  Financial  or  a  Commercial  account? 
Does  Merchandise  account  show  a  gain  or  a  loss?     Why? 
The  proprietor's  account  is  a  Financial  account.       Why? 


PART  ONE— STUDY  OF  ACCOUNTS  17 

EXERCISE  FOUR 

This  exercise  requires  five  accounts,  with  ledger  spaces  as  follows : 

Thomas  Hope,  Investment 3  lines 

Cash 10    " 

Merchandise 10    " 

Harvey  Bros 5    " 

L.  T.  Spencer 5    " 

Open  the  necessary  accounts,  make  the  required  ledger  entries,  and  prepare  proof  sheet 
and  statement  of  results  as  in  previous  exercises. 

TRANSACTIONS 

Jan.      1.  Thomas  Hope  invests  cash,  $500. 

5.  Bought  of  Harvey  Bros.  Mdse.  on  account  per  bill  rendered,  $128.75. 

6.  Sold  Mdse.  to  A.  C.  Stone  for  cash,  $61.25. 

7.  Bought  Mdse.  of  Cook  &  Co.  for  cash,  $142.50. 

9.  Sold  to  L.  T.  Spencer  on  account  6  brl.  Flour  @  $5.50. 

"  10.  Paid  Harvey  Bros,  cash  on  account,  $75. 

"  12.  Bought  Mdse.  of  L.  T.  Spencer  on  account,  $31.75. 

"  13.-  Sold  to  Harvey  Bros,  on  account  120  bu.  Potatoes  @  30  cts. 

"  14.  Sold  to  L.  T.  Spencer  on  account  28  cases  Eggs  @  $2.50. 

"  16.  Bought  of  Day  Bros,  for  cash,  Mdse.  amounting  to  $52.70. 

"  17.  Received  from  L.  T.  Spencer  cash  on  account,  $25. 

"  20.  Bought  of  Harvey  Bros,  on  account,  50  brl.  Flour  @  $4.25. 

"  21.  Paid  cash  for  freight  on  Flour,  $17.25. 

Feb.  2.  Sold  A.  T.  Chase  for  cash,  15  brl.  Flour  @  $4.75. 

"  4.  Paid  Harvey  Bros,  cash  on  account,  $50. 

"  7.  Received  of  L.  T.   Spencer  on  account,  $20. 

"  8.  Sold  all  merchandise  on  hand  for  cash,  $475. 

STATEMENT  OF  RESULTS 

1.  Total  Cash  debits $ 

2.  Total  Cash  credits ;  . ■ 

3.  Present  Cash  balance 

4.  Total  Merchandise  debits 

5.  Total  Merchandise  credits 

6.  Total  Merchandise  gains .   

7.  Balance  of  Harvey  Bros.'  account   

8.  Balance  of  L.  T.  Spencer's  account   

QUERIES 

Does  the  balance  of  Spencer's  account  show  a  resource  or  a  liability  ?  Why  ?  The  ac- 
count with  Harvey  Bros.? 

Does  the  increase  in  the  Cash  balance,  as  shown  by  the  present  balance,  equal  the  gain 
on  Merchandise?  Would  it  do  so,  if  Mr.  Hope  were  now  to  pay  in  cash  what  he  owes  to 
Harvey  Bros.,  and  receive  in  cash  what  Mr.  Spencer  owes  him? 

Classify  the  accounts  of  this  Exercise,  stating  which  are  "Financial"  and  which  "Com- 
mercial." 

EXERCISE  FIVE 

Expense  Account.  In  conducting  a  business  there  will  be  various  outlays,  as  rents, 
salaries,  lighting,  fuel,  water,  etc.  These  are  usually  grouped  under  an  account  called  "Ex- 
pense." This  account  always  shows  a  loss  because  the  entries  on  it  are  chiefly  debits  and 
represent  outlays  for  which  there  is  no  corresponding  income.  The  Expense  account  is 
debited  for  the  ordinary  running  expenses  of  the  business,  whenever  these  are  paid  for,  or 
where  there  is  an  agreement  to  pay  for  them.  The  debit  entries  on  an  expense  account 
represent  advantages  or  values,  for  which  cash  or  other  accounts  yielding  these  values  are 
credited. 


18  NEW  INDUCTIVE  BOOKKEEPING 

This  exercise  requires  accounts  and  spacing  as  follows : 

A.  H.  Harper,  Investment 3  lines 

Cash 8 

Merchandise    6 

Expense    6 

C.  Davis    3 

C.  P.  Drake  &  Co 3 

Proceed  as  in  previous  exercises. 

TRANSACTIONS 

Oct.     1.  A.  H.  Harper  invests  cash,  $600. 

"       2.  Paid  cash  for  rent  of  store,  $50.     (Debit  "Expense.") 

3.  Bought  Mdse.  for  cash,  $250.75. 

4.  Sold  to  C.  Davis  8  brl.  Flour  on  account  @  $4.50. 

"  5.  Paid  cash  for  installing  telephone.  $3.75.      (Debit  "Expense.") 

"  6.  Sold  Mdse.  for  cash,  $61.90. 

7.  Bought  of  C.  P.  Drake  &  Co.  Mdse.  on  account,  $152.40. 

"  9.  Bought  for  cash  5  tons  of  coal  @  $4.50  for  use  in  store. 

"  11.  Received  cash  of  C.  Davis  on  account,  $15. 

"  14.  Paid  C.  P.  Drake  &  Co.  cash  on  account,  $75. 

"  17.  Paid  cash  for  water  tax,  $5.20. 

"  18.  Sold  Mdse.  for  cash,  $95.50. 

STATEMENT  OF  RESULTS 

1.  Total  Cash  received $ '- — 

2.  Total  Cash  paid  out 

3.  Cash  on  hand 

4.  Total  debits  of  Merchandise 

5.  Total  credits  of  Merchandise 

6.  Balance  of  account  with  C.  Davis    

7.  Balance  of  account  with  C.  P.  Drake  &  Co .  .  . 

8.  Total  Expenses   


QUERIES 

Name  the  Financial  and  Commercial  accounts  in  this  exercise. 

Assuming  that  all  merchandise  has  been  disposed  of,  does  the  Merchandise  account  in 
this  set  show  a  loss  or  a  gain  ?  Why  ?  Suppose  there  is  merchandise  on  hand  in  the  store 
amounting  to  $250,  have  we  lost  or  gained  on  Merchandise?    How  much? 

Suppose  we  still  have  on  hand  5  tons  of  the  coal  bought  for  the  store,  does  this  affect 
the  losses  as  shown  by  the  Expense  account?     How? 


Opening  a  Set  of  Books 

The  exercises  thus  far  presented  are  intended  to  familiarize  the  student  with  the  form 
and  use  of  ledger  accounts  and  the  entries  in  them  as  required  by  the  General  Rule  for  Debit 
and  Credit.  We  are  now  to  consider  a  somewhat  more  extended  application  of  this  rule  to 
the  accounts  of  the  Ledger. 

By  "opening  the  books,"  we  mean  the  making  of  such  entries  as  are  required  at  the 
beginning  of  the  business  and  before  any  transactions  have  occurred. 

Capital.  This  is  the  general  term  including  all  the  resources  of  the  business,  as  cash, 
merchandise,  notes,  or  other  property. 

Net  Capital  or  Present  Worth.  By  this  term  is  meant  the  difference  between  the  sum 
of  the  resources  and  the  sum  of  the  liabilities.  Thus,  if  at  the  beginning  of  a  business  the 
proprietor  has  cash  to  the  amount  of  $1000  and  a  stock  of  merchandise  valued  at  $2500 
and  owes  debts  amounting  to  $800,  his  Net  Capital  or  Present  Worth  would  be  $1000+$2500 
(=$3500)— $800=$2700. 

ACCOUNTS  REQUIRED  ON  OPENING  BOOKS 

On  beginning  the  business,  accounts  must  be  opened  representing  the  several  classes  of 
property  on  hand,  or  amounts  due  the  business,  and  accounts  must  be  opened  representing 
what  the  business  owes.  An  account  is  also  opened  with  the  proprietor  himself,  or,  in  case  of 
a  partnership,  accounts  with  the  several  proprietors. 

GENERAL  RULE 

On  beginning  the  business,  debit  each  accoount  showing  a  resource  with  the  amount  of  the 
resource  on  hand;  credit  each  account  showing  a  liability  with  the  amount  of  the  liability, 
and  credit  the  proprietor  with  the  amount  of  the  net  capital  or  present  worth. 

Note. — In  case  there  are  no  liabilities,  the  proprietor  is,  of  course,  credited  with  the  amount  of  the 
resources. 

Carefuly  study  the  application  of  the  foregoing  rule  to  the  following  opening  statement 
and  accompanying  entries.  Notice  that  the  resources  equal  the  liabilities,  including  in  the 
latter  the  proprietor's  net  capital,  which  is  a  liability  of  the  business.  This  amount  is  found 
bv  subtracting  the  sum  of  the  other  liabilities  from  the  sum  of  the  resources. 

Note. — The  student  should  notice  the  distinction  between  the  business  itself  and  the  person  who  owns 
it.  It  should  be  observed  that  the  business  owes  the  proprietor  or  proprietors  who  invest  in  it,  just  as  it 
may  owe  other  persons. 

OPENING  STATEMENTS  FOR  GROCERY  BUSINESS 

On  June  1,  19 — ,  F.  L.  LaGrange  opens  a  grocery  business  with  the  following  list  of  re- 
sources and  liabilities : 

RESOURCES 

Cash  on  hand $1500 

Merchandise  per  inventory  of  stock  on  hand 3750 

Real   Estate,    store   building  and  lot    2000 

C.  H.  Jones,  owes  on  account.  . 65 

LIABILITIES 

Due  S.  P.  Davis  &  Son  on  account   $  275 

Due  R.  H.  Miller  on  account 150 

By  the  foregoing  statement  the  following  accounts  and  entries  are  required: 

—v.)— 


20 


NEW  INDUCTIVE  BOOKKEEPING 


OPENING  LEDGER  ACCOUNTS— F.  L.  LA  GRANGE 


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Chatties  Account.  Drays,  trucks,  horses,  harness  and  other  similar  property  required 
in  carrying  on  a  business  are  usually  included  in  an  account  called  "Chattels." 

Furniture  and  Fixtures  Account.  An  account  with  the  title  "Furniture  and  Fix- 
tures," is  often  kept,  under  which  is  included  counters,  shelves,  show  cases,  office  furniture, 
stoves,  scales,  or  any  similar  store  property  that  is  used  in  conducting  the  business. 

Real  Estate  Account.  Immovable  property,  as  lands,  store  buildings,  warehouses,  etc., 
are  included  under  the  title  Real  Estate,  if  they  are  for  use  in  connection  with  the  business.  If 
such  properties  are  held  for  other  purposes  than  for  the  use  of  the  business,  it  would  be  better 
to  keep  a  separate  account  with  each  property  under  a  distinctive  title.    (See  Exercise  Eight.) 


PART  ONE— STUDY  OF  ACCOUNTS  21 

EXERCISE  SIX 
OPENING   STATEMENT   FOR   HARDWARE   BUSINESS— EIGHT   ACCOUNTS 

Using  your  ledger  practice  paper,  open  the  necessary  accounts  for  the  following  exer- 
cises.    In  opening  the  ledger,  allow  three  lines  for  each  account. 

May  10,  19 — .  On  this  date  Henry  Maynard  begins  a  hardware  business  with  resources 
and  liabilities  as  follows : 

Resources.  Cash  $1250;  Stock  of  goods  in  store  as  per  inventory.  $3562.50;  Real 
Estate,  store  building  and  lot,  $1875.  The  following  persons  owe  the  proprietor  on  account : 
C.  W.  Hill,  $45.90;  S.  P.  Cress,  $71.15. 

Liabilities.  The  proprietor  owes  the  following  persons  on  account:  S.  W.  Snow  &  Co.. 
$162.90;  The  Chicago  Hardware  Co.,  $241.50. 

EXERCISE  SEVEN 
OPENING  STATEMENT  FOR  COAL  BUSINESS— TEN  ACCOUNTS 

Oct.  15,  19 — .  J.  A.  Webb  opens  a  coal  business  with  the  following  resources  and  lia- 
bilities : 

Resources.  Coal  on  hand,  per  inventory,  $2356.20 ;  Wood  in  yard,  56  cords  @  $3.75 ; 
(Open  separate  accounts  with  "Coal"  and  with  "Wood")  ;  Cash  on  hand,  $956.25;  horses, 
wagons,  harness,  etc.,  valued  at  $750.  (Open  an  account  with  "Chattels.")  The  following 
persons  owe  the  proprietor  on  account :  R.  W.  Blue,  $45.75 ;  A.  N.  Peters,  $28.90 ;  Charles 
McKay,  $54.25. 

Liabilities.  The  proprietor  owes  on  account,  S.  P.  Johnson,  $145.60 ;  The  Eureka  Coal 
Company,  $751.40. 

EXERCISE  EIGHT 

OPENING  STATEMENT  FOR  REAL  ESTATE  BUSINESS— NINE  ACCOUNTS 

Jan.  1,  19 — .  S.  T.  Hendricks  begins  the  real  estate  business  with  resources  and  liabili- 
ties as  follows : 

Resources.  Cash,  $9750;  Safe  and  other  office  furniture,  $500;  (Open  an  account  with 
"Office  Fixtures.")  Real  Estate  property  as  follows:  (Open  separate  account  with  each.) 
No.  245  Water  Street,  $2500 ;  No.  519  Oak  Avenue,  $3500.  The  following  persons  owe  the 
proprietor  on  account :    A.  W.  Randall,  $275 :  Chas.  R.  Brown,  $240. 

Liabilities.  Mr.  Hendricks  owes  the  following  persons  on  account :  Cooper  &  Hen- 
shaw,  $350;  George  P.  Martin,  $125;  A.  C.  Stone  &  Co.,  $565. 

EXERCISE  NINE 

This  opening  is  followed  by  transactions  affecting  the  several  accounts.  The  account- 
titles  with  required  spacing,  as  follows: 

A.  M.  Lawrence,  Investment 3  lines 

Cash  10    " 

Merchandise    10    " 

Expense    4    " 

A.  P.  Moore 4    " 

No.  125  Maple  St 5    " 

M.  F.  Mason 4    " 

The  Stanton  Grain  Co 4    " 

When  this  ledger  is  completed,  prepare  proof  sheet  and  statement  of  results  as  hereto- 
fore. 

OPENING  STATEMENT 

Sept.  1,  19 — .  A.  M.  Lawrence  begins  the  Feed  and  Provision  business. with  the  follow- 
ing resources  and  liabilities : 

Resources.  Cash  on  hand,  $475.60 ;  merchandise  in  stock  as  per  inventory,  $1156.25 : 
balance  due  from  A.  P.  Moore  on  account,  $42.70.  Mr.  Lawrence  also  owns  a  piece  of  real 
estate  property  at  No.  125  Maple  Street  with  which  he  wishes  to  keep  a  separate  account,  and 
which  is  valued  at  $2000. 

Liabilities.  The  proprietor  owes  the  following  persons  on  account :  M.  F.  Mason, 
$252.80;  The  Stanton  Grain  Co.,  $721.75. 


NEW  INDUCTIVE  BOOKKEEPING 


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TRANSACTIONS 

Paid  cash  to  S.  Jones  for  rent  of  storeroom  to  Oct.  1,  $50. 

Sold  merchandise  for  cash,  $91.20. 

Paid  M.  F.  Mason  cash  on  account,  $75. 

Sold  to  A.  P.  Moore  on  account,  200  lbs.  Bacon  @  12  cts. 

Paid  cash  for  taxes  on  property  at  No.  125  Maple  Street,  $17.50. 

Sold  to  M.  F.  Mason  on  account,  120  bu.  Potatoes  @  45  cts. 

Sold  merchandise  for  cash,  $256.20. 

Received  cash  for  rent  of  property  at  125  Maple  Street,  $18. 

Paid  the  Stanton  Grain  Co.  cash  on  account,  $150. 

Bought  of  M.  F.  Mason  on  account  50  bu.  Apples  @  75  cts. 

Paid  electric  lighting  bill  for  store  in  cash,  $4.75. 

Received  cash  for  merchandise  sales,  $165.90. 

Paid  cash  for  painting  house  at  125  Maple  Street,  $13.50. 

Sold  Stanton  Grain  Co.,  on  account,  160  bu.  Oats  @  40  cts. 

Sold  all  the  rernaining  merchandise  on  hand  for  cash.  $650. 

Sold  the  property  at  125  Maple  Street  for  cash,  $2100. 

STATEMENT  OF  RESULTS 

Total  Cash  received $ 

Total  Cash  paid  out . — 

Total  Cash  on  hand 

Cost  of  Merchandise : .  . 

Receipts  from  Merchandise 

Gains  from  Merchandise 

Total  Expenses 

Balance  of  "No.  125  Maple  Street" 

Balance  of  Stanton  Grain  Co 

Balance  of  M.  F.  Mason 

Balance  of  A.  P.  Moore 

Total  Resources  at  conclusion  of  business .... 

Total  Liabilities  at  conclusion  of  business .... — 

Proprietor's   present   worth,  or    net    capital  at 

conclusion  of  business 


QUERIES 

What  two  accounts  in  this  set  show  gain  ?  What  is  the  total  gain  ?  What  account  shows 
loss?  How  can  we  find  the  net  gain?  What  is  its  amount?  If  we  add  the  net  gain  to  the 
proprietor's  net  capital  on  beginning  business,  the  sum  should  equal  the  proprietor's  net  capital 
at  the  end  of  the  business.  See  if  this  is  the  case  in  the  present  set.  Name  the  Commercial 
and  Financial  accounts  of  this  exercise. 

BILLS  RECEIVABLE  AND  BILLS  PAYABLE 

Promissory  notes  and  other  written  obligations  to  pay  money  are  not  treated  as  ordinary 
debts  on  account,  but  are  kept  under  two  accounts,  known  respectively  as  Bills  Receivable 
and  Bills  Payable.  Bills  Receivable  include  the  written  obligations  that  others  owe  to  the 
proprietor,  and  Bills  Payable  include  written  obligations  that  the  proprietor  owes  to  others. 
It  follows,  therefore,  that  Bills  Receivable  are  resources,  while  Bills  Payable  are  liabilities. 

The  person  who  signs  a  note  is  called  the  maker  or  payer;  the  person  to  whom  a  note  is 
payable  is  called  the  payee. 

Notes  and  other  written  promises  to  pay  money  are  known  in  business  generally  as  com- 
mercial paper.  They  are  usually  transferable  from  one  person  to  another,  ani  frequently 
draw  interest.  A  more  extended  discussion  of  commercial  paper  will  be  found  in  another 
part  of  this  book. 


PART  ONE— STUDY  OF  ACCOUNTS  23 


Illustrations  of  the  General  Rule.  We  debit  Bills  Receivable  account  whenever  we  re- 
ceive another's  written  promise  to  pay,  and  credit  it  whenever  others  pay  us  anything  on  their 
notes  held  by  us. 

We  debit  the  Bills  Payable  account  whenever  we  give  anything  of  value  as  a  payment  on 
any  of  our  own  notes,  or  other  written  promises  to  pay,  and  we  credit  Bills  Payable,  when- 
ever we  issue  our  own  promise  to  pay  in  exchange  for  any  valuable  thing,  or  for  the  settle- 
ment of  a  debt. 

If  a  person  who  owes  us  on  account  pays  or  settles  his  account  by  giving  us  his  note, 
we  debit  Bills  Receivable  and  credit  the  person.  Why  ?  When  we  settle  our  own  personal 
account  with  another  by  giving  him  our  own  note,  we  debit  the  person  we  owe  and  credit 
Bills  Payable.    Why? 

The  Interest  Account.  Interest  is  an  allowance  for  the  use  of  money  or  its  equivalent. 
Both  Bills  Receivable  and  Bills  Payable  usually  (but  not  always)  bear  interest.  Interest 
is  also  frequently  charged  on  over-due  personal  accounts,  and  on  the  investment  of  capital. 
The  Interest  account  is  a  Commercial  account  and  shows  gain  or  loss.  But  accrued  interest 
receivable  is  a  resource,  and  accrued  interest  payable  is  a  liability.  The  Interest  account  is 
debited  whenever  it  costs  us  value,  that  is,  whenever  we  pay  anything  on  our  interest  obliga- 
tions to  others,  and  it  is  credited  whenever  it  produces  us  value  through  interest  payments 
made  by  others  to  us. 

Illustrations.  If  Mr.  Allen  pays  us  cash  for  interest  due  on  his  note,  we  debit  Cash  and 
credit  Interest.  If  he  sells  us  goods  to  be  applied  as  an  interest  payment,  we  would  debit  Mer- 
chandise and  credit  Interest. 

If  we  pay  Mr.  A.  cash  for  interest  due  on  our  note,  we  debit  Interest  and  credit  Cash. 
It  usually  happens,  in  transactions  involving  notes,  that  payments  are  made  in  one  transac- 
tion covering  both  the  note  and  the  interest. 

Thus,  suppose  Mr.  A.  holds  our  note  for  $50  on  which  there  is  accrued  interest  amount- 
ing to  $2.50,  and  we  pay  him  cash  for  the  whole  amount,  and  take. up  the  note,  the  entries 
would  be  as  follows :  Bills  Payable  would  be  debited  for  $50,  Interest  would  be  debited  for 
$2.50,  and  Cash  would  be  credited  for  $52.50.  On  the  other  hand,  should  we  hold  Mr.  A.'s 
note  with  accrued  interest,  and  he  should  pay  it  in  cash,  we  should  debit  Cash  and  credit 
Bills  Receivable  and  Interest. 

Note.- — When  one  transaction  affects  more  than  two  accounts,  the  entries  resulting  are  called  com- 
pound entries. 

Accounts  Receivable.  This  is  a  general  term  often  applied  to  personal  accounts  that 
show  debit  balances,  and  are  therefore  resources. 

Accounts  Payable,  are  personal  accounts  showing  credit  balances ;  these  are,  of  course, 
liabilities. 

EXERCISE  TEN 

In  this  exercise,  transactions  are  introduced  involving  Bills  Receivable,  Bills  Payable, 
and  Interest.  In  entering  these  on  the  ledger,  be  very  careful  to  distinguish  between  Bills  Re- 
ceivable and  Bills  Payable,  also  to  apply  correctly  the  General  Rule,  in  making  the  several 
debits  and  credits  required, 

The  account  titles  and  spacing  are  as  follows : 

A.  W.  Carter,  Investment .  . 3  lines 

Cash 11    " 

Merchandise 8    " 

Bills  Receivable ..." 12    " 

Bills  Payable 6    " 

-    Interest' 7    " 

Expense    3    " 

M.  L.  Carmodv  2    " 

T.   B.   Henning , 2    " 

F.  Mantell   :'. 2 '  " 

The  Hamlin  Mills  Co :  .   4    " 


24  NEW  INDUCTIVE  BOOKKEEPING 

OPENING  STATEMENT 

On  Jan.  25,  19 — ,  A.  W.  Carter  engaged  in  a  Flour  and  Grain  Business,  with  re- 
sources and  liabilities  as  follows : 

Resources.  Cash  per  balance  in  bank,  $987.45.  Notes  on  hand  (Bills  Recievable), 
$427.95.  Personal  accounts,  with  balances,  owed  to  Mr.  Carter  as  follows :  T.  B.  Henning. 
$71.25,  F.  Mantell,  $42.30. 

Liabilities.  Bills  Payable,  (Mr.  Carter's  outstanding  notes),  $259.75.  The  Hamlin 
Mills  Co.,  $181.60,  balance  of  account. 

TRANSACTIONS 

Jan.  25.     Paid  cash  to  R.   Miller  for  rent  of  warehouse,  one  month  in  advance,  $25. 
"     26.     Bought  of  the  Hamlin  Mills  Co.,  on  account,  an  invoice  of  flour  amounting 
to  $229.65. 

Jan.  27.  Bought  of  various  persons  for  cash,  quantities  of  wheat,  oats,  and  barley  to  be 
delivered  in  the  warehouse,  amounting  to  $527.15. 

Jan.  28.  C.  H.  Williams  hands  cash  in  payment  of  his  note  for  $56.20,  with  accrued 
interest  $4.15.  (Debit  cash  for  whole  amount  received  and  credit  Bills  Rec.  and  Interest. 
If  a  cash  book  is  kept  the  items  would  be  entered  separately.) 

Jan.  30.     Sold  to  R.  Jennings  on  his  note,  200  bu.  wheat  at  90  cents  per  bu. 
"     31.     Bought  of  M.  L.  Carmody  on  account,  520  bu.  corn  at  40  cents  per  bu. 

Feb.  1.  Paid  T.  Smith  cash  for  the  firm's  note  in  his  favor  for  $75  with  accrued  in- 
terest amounting  to  $3.90.  (Debit  Bills  Pay.  and  Interest  and  credit  Cash  for  the  entire 
amount. ) 

Feb.  2.  Handed  the  firm's  check  for  $150  to  the  Hamlin  Mills  Co.,  to  be  applied  on 
account.     (A  bank  check  is  considered  cash.) 

Feb.  3.  Bought  of  James  Bell,  giving  the  firm's  note  in  payment,  750  bu.  wheat  at  $1 
per  bu. 

Feb.  4.  L.  Thompson  presented  his  bill  to  date  for  labor  $41.60.  Gave  him  the  firm's 
check  in  payment. 

Feb.  5.  Sold  to  the  Stanton  Grain  Co.,  on  their  note  at  30  days,  250  bu.  barley  at  50 
cents  per  bu. 

Feb.  7.  D.  S.  Hart  handed  us  his  check  in  payment  of  his  note  in  our  favor  for  $130 
with  accrued  interest  $14.25. 

Feb.  8.  Sold  to  S.  W.  Roberts  200  bu.  corn  at  45  cents,  receiving  in  payment  his  note 
for  $50  and  cash  for  the  balance. 

Feb.     9.     Gave  the  Hamlin  Mills  Co.  the  firm's  note  to  settle  their  account  to  date. 
"     10.     Handed  James  Bell  the  firm's  check  for  $125  to  be  applied  on  the  note  given 
him  for  the  wheat  purchased  on  Feb.  3. 

Feb.  11.  T.  M.  Hunt  handed  us  his  check  in  payment  of  his  note  for  $65  with  interest 
to  date  $2.90. 

Feb.  12.  Sold  to  A.  P.  Mason  &  Co.,  a  lot  of  grain  amounting  to  $475.80.  They  give 
us  in  payment  their  check  for  $200  and  their  note  at  10  days  for  balance. 

Feb.  14.     F.  Mantell  settles  his  account  by  handing  us  his  note  at  30  days. 
"     15.     C.  W.  Mains  hands  us  his  check  for  $7.80  in  payment  of  interest  due  on  his 
note  to  date. 

Feb.  16.  Delivered  to  M.  L.  Carmody  to  be  applied  on  his  account.  Cash  $50  and  15 
brl.  flour  at  $1.00  per  brl.     (Three  ledger  entries.) 

Feb.  17.     Bought  of  the  Hamlin  Mills  Co.  on  account,  125  brl.  flour  at  $3.60  per  brl. 
"     18.     Paid  with  check  the  firm's  note  in  favor  of  R.  P.  Ray,  $95  with  accrued  in- 
terest $5.25. 

Feb.  19.     T.  B.  Henning  pays  us  cash  on  account  $45. 
"     21.     Sold  our  entire  stock  of  Merchandise  on  hand  to  C.  W.  Chase,  for  $1475.50. 
He  gives  us  in  payment  his  check  for  $500,  and  his  note  at  90  days  for  the  remainder. 


PART  ONE— ORIGINAL  ENTRIES  25 

STATEMENT  OF  RESULTS 

1.  Present  balance  of  the  Cash  account $ 

2.  How    much    is    now    owed  to  the  business  on 

Bills   Receivable  ? 

3.  How  much  is  owed  to  the  business  on  per- 

sonal accounts  ? 

4.  What  are  the  present  total  resources    of   the 

business  ?   

5.  How  much  does  the  business    owe    on    Bills 

Payable  ?    

6.  How  much  does  it  owe  on  personal  accounts  ?  — 

7.  What   are   the   present  liabilities,  aside  from 

what  the  business  owes  the   proprietor  ?. .  . 

8.  What  is  the  net  capital  or  assets  of  the  busi- 

ness ?    

9.  Does  the  Merchandise  account  show  a  loss  or 

gain  and  how  much? 

10.  Does    the    Interest  account  show  a  loss  or  a 

gain  ?    How  much  ? 

11.  What  is  the  loss  shown  by  the  Expense  ac- 

count?     

12.  Does  the  business  as  a  whole  show  a  loss  or 

a  gain  ?     How  much  ? 

13.  Has  the  net  capital  been  increased  or  dimin- 

ished ?    How  much  ? 

ORIGINAL  ENTRIES  AND  JOURNALIZING 

Thus  far  the  student's  attention  has  been  directed  to  the  study  of  accounts,  the  applica- 
tion to  them  of  the  principles  of  debit  and  credit,  and  to  what  the  accounts  show  as  to  the 
results  and  condition  of  the  business. 

We  are  now  ready  to  consider  the  methods  of  making  original  entries,  or  those  records 
that  should  be  made  at  the  time  the  transaction  occurs,  and  which  supply  the  data  for  subse- 
quently making  the  entries  in  the  Ledger  accounts. 

So  important  is  the  original  entry  in  a  set  of  books,  that  it  alone  of  our  records  can  ap- 
pear as  evidence  in  a  disputed  account.  If  in  our  settlement  with  a  person  with  whom  we 
have  had  dealings  our  account  is  disputed,  and  the  case  is  submitted  to  a  court  for  decision 
as  to  the  correct  balance,  our  historical  entries  only  will  be  accepted  as  evidence,  and  thev 
only  on  certain  conditions;  namely,  that  our  records  in  other  cases  than  those  under  dispute 
can  be  proved  correct,  that  the  records  were  written  at  or  near  the  time  of  the  transaction, 
and  that  there  are  no  signs  of  erasures  or  alterations  in  the  original  entries  in  question. 

To  meet  these  requirements,  and  to  make  a  set  of  record  books  that  would  inspire  con- 
fidence as  evidence  in  a  case,  we  would  suggest  that  the  student  observe  the  following: 

RULES  FOR  MAKING  ORIGINAL  ENTRIES 

1.  In  recording  sales  on  account,  the  quantity  and  price  of  each  item  should  be  given, 
and  in  recording  purchases  on  account,  the  quantity  and  price  of  each  item  should  be  given, 
unless  a  bill  of  the  purchase  is  kept  on  Me. 

2.  Every  original  entry  should  be  made  on  the  day  on  which  the  transaction  occurs. 

3.  In  the  case  of  an  error  in  the  original  entry,  do  not  erase  or  interline,  but  mark  the 
record  "void"  and  write  a  nezv  one,  explaining  that  it  is  a  correction.  Erasures  or  correc- 
tions may  occur  in  any  records  except  original  entries. 

4.  As  bookkeeping  affords  no  method  of  proving    original    entries   correct,  the  book 
keeper  must  train  himself  to  absolute  accuracy  in  recording  such  entries. 

The  Day  Book  and  Journal.  In  former  times  it  was  the  custom  of  bookkeepers  to  write 
out  a  complete  history  of  each  transaction,  at  the  time  it  occurred,  in  a  book,  which  was  called 
at  first  a  waste  book,  or  blotter,  but  wlrch  finally  came  to  be  called  a  day  book. 


26 


NEW  INDUCTIVE  BOOKKEEPING 


THE  OLD  TIME  DAY   BOOK— RARELY  USED  IN  MODERN  ACCOUNTING 


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After  making  the  day  book  records,  trie  debit  and  credit  for  each  transaction,  with  the 
ledger  title  of  the  account  affected,  were  entered  in  a  book  called  a  journal.  This  book  had 
two  money  columns,  the  first,  or  left  hand,  column  was  used  for  debits,  and  the  second,  or 


PART  ONE— JOURNALIZING 


27 


right  hand,  column  for  credits.  The  process  of  determining  the  debits  and  credits  arising 
from  a  transaction  and  entering  them  respectively  in  the  journal  was  called  journalizing. 
The  subsequent  transfer  of  these  amounts  to  the  ledger  accounts  is  called  posting. 

The  student  should  now  read  the  original  entries  in  the  day  book,  shown  on  page  26, 
and  notice  how  the  required  debits  and  credits  arising  from  the  several  transactions  were 
entered  on  the  journal. 

Journal-Day-Book  or  Modern  Journal.  Bookkeepers,  after  a  while,  found  that  it 
is  much  more  convenient  to  include  the  history  of  a  transaction  and  the  debits  and  credits 
arising  from  it  in  one  entry,  and  in  one  book,  instead  of  using  separate  entries  and  separate 
books.  The  book  used  for  this  purpose  was  at  first  called  a  journal-day  book,  historical 
journal,  explanatory  journal,  etc.,  but  the  book  when  now  used  is  usually  referred  to  simply 
as  a  journal.  This  more  modern  form  of  journal  shown  on  this  page,  records  the  same  trans- 
actions, as  those  recorded  in  the  separate  day  book  and  journal  which  precede  it. 

Practical  bookkeepers  now  seldom  use  the  two-column  journal  for  original  entries,  this 
book  having  been  largely  displaced  by  the  cash  book,  sales  book,  and  various  kinds  of  special 
column  or  columnar  journals,  having  more  than  two  columns.  The  two-column  journal  as 
here  illustrated  should  be  thoroughly  understood  by  the  student,  however,  since  it  is  the  basis 
of  all  other  books  of  original  entry. 

THE  JOURNAL-DAY  BOOK,  OR  MODERN  JOURNAL 


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Journalizing.  In  the  narrow  sense,  the  term  "journalizing"  means  recording  the 
debits  and  credits  of  a  transaction  in  the  journal,  but  in  a  broader  sense  the  term  is  used  by 
bookkeepers  to  imply  a  mere  oral  statement,  or  mental  judgment  as  to  the  debits  and  credits 
arising  from  a  transaction  and  without  regard  to  the  formal  entry  of  the  transaction  in  a 
journal.     - 

In  this  course,  the  journal,  as  a  book  of  record,  is  used  only  where  the  use  of  the  book 
would  be  justifiable  from  the  standpoint  of  practical  bookkeeping.     But  in  the  journalizing 


28 


NEW  INDUCTIVE  BOOKKEEPING 


drills,  at  the  close  of  Part  One,  the  student  is  required  to  prepare  journal  entries 
for  many  kinds  of  transactions  that,  in  practical  bookkeeping,  would  not  actually  be  entered 
in  a  journal.  The  use  of  the  journal  for  this  purpose  is  simply  to  afford  the  student  a  con- 
venient method  of  showing  the  debits  and  credits  that  arise  from  a  large  number  of  transac- 
tions. A  practical  bookkeeper  must  be  able  to  form  quick  judgments  as  to  debits  and  credits, 
and  to  acquire  this  facility,  he  must  have  much  practice  in  journalizing. 

The  student  should  carefully  study  the  form  of  entry,  and  the  debits  and  credits  of  the 
following  illustrative  journal  entries.  The  debits  and  credits  are,  of  course,  determined  by 
the  General  Rule  that  the  student  has  heretofore  applied  to  the  entries  made  directly  on  the 
ledger  accounts. 

Note. — The  so-called  "Rules  for  Journalizing"  given  in  many  texts  on  bookkeeping  are  merely  the 
application  of  the  general  laws  of  debit  and  credit  to  entries  made  in  the  journal. 

ILLUSTRATIVE  TRANSACTIONS  FOR  JOURNALIZING 

1.  March  6.  Sold  to  L.  C.  Tuttle  for  cash,  groceries  per  bill  rendered,  amounting  to 
$39.60. 


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2.     April  10.     Bought  of  J.  M.  Bell  &  Co.,  on  account,  12  tons  of  coal 
in  store. 


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(Zszy?ze^rz^l-£-s 


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3.  May  9.     Sold  to  O.  H.  Spence,  on  account  at  30  days,  15  brl.  flour  @  $5.25  and  5 
brl.  pork  @  $13. 

4.  June  15.     Paid  T.  C.  Price  store  rent  for  June  in  cash,  $45. 


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5.     July  7.     Paid  cash  for  repairs  on  property  at  No.  9  Oak  Street,  $21.50 


¥S 


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6.     Aug.  6.     Bought  of  C.  Nelson,  on  account  at  60  days,  1  dray  for  use  in  business, 
$46.50. 


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7.     Sept.  14.     Received  from  A.  C.  Harmon,  cash  on  account,  $25. 


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25 


PART  ONE— JOURNALIZING 


29 


8.     Oct.  1.     Bought  of  Walker  Bros.,  on  account  at  30  days,  75  bu.  potatoes  @  40c. 


O^.     / 


3  0 


3  0 


9.     Nov.  16.     Paid  the  Union  Produce  Co.,  cash  on  account,  $125. 


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10.     Dec.  8.     Received  from  C.  M.  Starr,  cash  for  interest  due  on  his  note  of  Jan.  2, 
$19.75. 


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11.     Jan.  14.     Bought  of  L.  W.  Nelson  for  cash,  65  bu.  apples  @  60c. 


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12.     Feb.  16.     Paid  F.  M.  Staley  cash  for  interest  due  on  my  note  of  May  7,  $31.40. 


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Having  carefully  studied  the  foregoing  transactions  and  model  journal  entries,  the 
student  may  now  write  the  necessary  journal  entries  for  the  following  exercise,  using  for  the 
purpose  a  sheet  of  journal  paper.  Study  each  transaction  very  carefully,  and  the  rules  of 
debit  and  credit  that  apply  to  it,  before  attempting  to  make  the  entry.  Refer  to  the  model 
entries  when  necessary. 

EXERCISE  ELEVEN 

TRANSACTIONS  FOR  JOURNALIZING 

Jan.     2.  Sold  A.  W.  Hill  on  account  at  30  days,  16  boxes  Soap  @  $3.50. 

"       4.  Paid  cash  to  T.  S.  Moore  for  stationery  for  store  use,  $7.50. 

Feb.     6.  Received  from  L.  Snyder  cash  on  account,  $20. 

6.  Bought  of  Spencer   &    Sons  at  30  days,  20  brl.  Corned  Beef  @  $12.50. 

Note. — Leave  date  columns  blank  when  transactions  occur  on  same  date  as  preceding  transactions. 

Mar.    7.  Sold  to  J.  P.  Miller  for  cash,  12  brl.  Salt  @  $1.75. 

"     15.  Received  from  R.  S.  Peters  cash  for  interest  on  his  note  of  Oct.  6,  $14.90. 

Apr.  12.  Paid  Bell  &  McGuire  cash  on  account,  $50. 

May  6.  Bought  of  Miles  Bros,  on  account,  a  bill  of  wrapping  paper  and  twine  for 
use  in  store,  $23.50. 

June    1.  Sold  to  L.  S.  Thomas  for  cash,  15  brl.  Flour  @  $4.75. 

July  15.  Bought  for  cash  of  C.  Randall,  a  set  of  harness  for  use  in  our  delivery  de- 
partment, $38.50. 

July  20.  Bought  of  Stone  &  Co.,  for  cash,  75  boxes  Oranges  @  $2.10. 

"     20.  Received  cash  for  June  rent  of  property  at  No.  12  Park  Street,  $20. 

Aug.    4.  Paid  cash  for  insuring  stock  of  merchandise,  $11.25. 

"     19.  Sold  to  A.  C.  Parker  at  30  days,  20  boxes  Oranges  @  $2.25. 

Sept.    9.  Sold  property  at  No.  12   Park  Street  for  cash,  $2500. 


30 


NEW  INDUCTIVE  BOOKKEEPING 


The  following  exercise  consists  of  transactions  involving  simple  and  compound  journal 
entries,  affecting  the  accounts  with  Bills  Receivable,  Bills  Payable,  and  Interest.  In  journal- 
izing these  transactions,  consult,  if  necessary,  the  model  entries  following  the  exercise. 

EXERCISE  TWELVE 

May  2.  Sold  to  T.  M.  Simmons  on  his  note  at  30  days,  Mdse.  per  bill  rendered, 
$226.15. 

May    3.     Paid  cash  on  my  note  of  Jan.  1,  favor  of  L.  Smith,  $25. 
"       4.     A.   W.   Randall  has  settled  his  account  to  date  by  giving  us  his  note  at  60 
days,  for  $91.50. 

May    6.     Bought  of  Carter  Bros,  on  our  note  at  90  days,  1256  lbs.  Lard  @  10  cts. 

7.     We  have  bought  of  Geo.  Harper  to  be  applied  as  a  payment  on  his  note  of 
Feb.  1,  75  bu.  Potatoes  @  50  cts. 

May  10.  We  have  settled  our  account  to  date  with  Stevens  &  Mason,  giving  them  our 
30  day  note  for  $152.65. 

May  12.  C.  A.  Parker  has  handed  us  his  check  in  payment  of  his  note  of  Jan.  1,  $75, 
with  accrued  interest  to  date,  $8.15.     (Compound  Entry.) 

May  15.  We  have  sold  to  Stone  &  Co.  a  bill  of  Mdse.  amounting  to  $63.40,  which  is 
to  be  applied  as  a  payment  on  our  note  of  April  6,  in  their  favor. 

May  16.  We  have  paid  in  cash  our  note  of  Feb.  12,  favor  T.  Wilson,  $125,  with  ac- 
crued interest,  $5.27. 

May  16.  We  have  purchased  of  L.  Davis  enough  Potatoes  @  40c  per  bu.  to  pay  his 
note  in  our  favor  for  $35.60,  with  accrued  interest,  $2.18. 


MODEL  JOURNAL  ENTRIES— BILLS  PAYABLE  AND  RECEIVABLE 


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A  Model  Set  of  Books 

You  are  now  to  study  a  complete  set  of  books,  as  they  would  be  opened,  kept  and  closed 
by  a  bookkeeper.  In  the  Model  Set,  here  presented,  a  journal  and  cash  book  are  used  for 
original  entries,  and  after  the  entries  have  been  posted  to  the  several  accounts  in  the  ledger,  a 
balance  sheet  is  prepared  and  the  ledger  closed  in  due  form.  As  this  Model  Set  is  to  be  used 
as  a  guide  in  your  subsequent  work,  you  should  study  the  set  carefully,  with  all  explanations 
and  instructions  relating  to  it.  By  becoming  thoroughly  familiar  with  this  Model  Set,  now, 
the  student  will  save  himself  much  perplexity  and  delay  in  the  work  that  follows. 

The  Cash  Book.  This  is  a  book  for  recording  cash  transactions.  The  ruling  of  a  two- 
column  cash  book  is  the  same  as  that  of  a  journal.  The  left-hand,  or  even-numbered  pages 
are  for  debits,  and  the  right-hand,  or  odd-numbered  pages  are  for  credits.  The  cash  book  is, 
therefore,  simply  a  ledger  cash  account  kept  in  a  separate  book,  with  space  for  writing  the 
"explanation,"  or  history  of  each  transaction,  and  the  title  of  the  account  affected  by  it. 

The  debit  entries  in  the  cash  book,  page  34,  show  debits  of  cash,  and  corresponding 
credits  are  to  be  posted  to  the  proper  ledger  accounts,  unless  the  entry  in  the  cash  book  is 
part  of  a  journal  entry.  In  the  first  investment  entry,  the  folio  column  has  a  check  mark  (  V ) 
and  the  word  "Journal"  is  written  in  the  title  column  of  the  cash  book,  indicating  that  the 
credit  will  be  posted  from  the  journal.  In  like  manner  the  credit  entries  in  the  cash  book 
will  have  corresponding  debits  in  the  proper  ledger  account,  unless  they  are  carried  to  the 
cash  book  from  the  journal. 

The  first  money  column  of  each  cash  book  page  is  for  items,  and  the  second  column  is 
for  forwarded  entries  or  for  totals.  Some  cash  books  are  ruled  for  but  one  money  column 
to  a  page,  while  in  others,  many  columns  are  used,  each  for  a  separate  class  of  transactions. 

Closing  the  Cash  Book.  To  close  or  balance  an  account  is  to  enter  the  difference,  or 
balance,  on  the  lesser  side  (usually  in  red  ink)  and  then  enter  the  equal  footings  on  the  same 
ruled  line,  on  both  sides  of  the  account,  and,  finally  rule  double  line  closings.  The  method  of 
closing  and  ruling  up  the  cash  book  is  shown  in  the  cash  book  for  the  Model  Set  on  pages  34 
and  35.  The  method  of  closing  and  ruling  up  other  accounts  is  shown  on  pages  43  and  44. 
If  the  account  is  to  be  continued,  the  closing  entry  or  "balance"  is  forwarded  to  the  opposite 
side  of  the  account,  and  entered  in  black  ink  on  the  first  line  below  the  closing  rulings. 

Posting.  This  term  as  used  by  bookkeepers  means  the  transfer  of  amounts  from  a  book 
of  original  entry  to  the  proper  account  in  the  ledger.  A  book  of  original  entry  is  any  book, 
in  which  the  history  of  the  transaction  is  first  recorded.  In  the  Model  Set,  the  books  of  orig- 
inal entry  are  the  journal  (shown  on  pages  32  and  33),  and  the  cash  book  (shown  on  pages 
34  and  35). 

Postmarking.  When  an  amount  is  transferred,  or  "posted,"  from  a  book  of  origina 
entry  to  the  ledger,  the  page  (or  folio,  as  the  bookkeeper  calls  it)  of  the  ledger  is  entered  in 
the  folio  column  of  the  book  of  original  entry  opposite  the  amount,  while  the  folio  of  the 
book  from  which  the  amount  is  transferred,  is  entered  in  the  folio  column  of  the  ledger.  This 
process  is  called  postmarking.  Let  the  student  now  find  these  postmarkings,  for  the  second 
entry  in  the  Model  Journal,  page  32.  In  the  folio  coluhm  just  before  the  title,  "T.  M. 
Brown,"  the  figure  "3"  is  entered.  This  means  that  T.  M.  Brown's  account  is  to  be  found  on 
page  3  of  the  ledger.  Now  turn  to  the  Model  Ledger  on  page  38  of  the  text  (which  is  page 
3  of  this  ledger)  and  notice  that  the  figure  "1"  (the  page  of  the  journal  is  entered  in  the  folio 
column  of  the  ledger  on  the  debit  side  of  T.  M.  Brown's  account,  opposite  the  first 
entry.  Verify  the  postmarkings  of  other  entries  in  this  journal,  also  of  the  entries  in  the 
model  cash  book,  pages  34  and  35,  until  you  clearly  understand  the  process. 

Note. — Some  accountants  prefer  to  have  the  folio  column  ruled  next  to  the  amount,  instead  of  next 
to  the  date  as  in  the  forms  here  shown,  and  books  are  often  ruled  in  this  way. 

—31— 


32 


NEW  INDUCTIVE  BOOKKEEPING 


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34 


NEW  INDUCTIVE  BOOKKEEPING 


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The  Ledger  Explanation  Column.  This  is  the  wide  column  to  the  right  of  the  date 
column  in  the  ledger.  It  is  used  for  entering  the  initial  of  the  book  of  original  entry  from 
which  the  amount  has  been  posted.  (J — journal,  C — cash  book,  S — sales  book,  P — pur- 
chase book,  etc.) 

This  column  is  sometimes  used  in  the  Bills  Receivable  account  for  entering  the  names  of 
the  makers  of  the  notes,  and  in  the  Bills  Payable  account,  for  the  names  of  the  payees.  It  is 
often  used  in  personal  accounts,  to  enter  the  terms  of  sale. 

Checking  the  Ledger.  This  means  going  over  the  postings  from  the  books  of  original 
entry  to  see  that  they  have  been  properly  transferred  to  the  ledger.  It  frequently  happens 
that,  through  incorrect  postings,  the  books  are  "thrown  out  of  balance,"  that  is,  the  sum  of 
all  the  debits,  as  shown  by  the  proof  sheet,  does  not  equal  the  sum  of  all  the  credits.  In  this 
case  it  becomes  necessary  to  locate  the  error  by  checking  the  ledger.  In  doing  this,  each  entry 
that  is  verified,  is  checked  by  means  of  a  check  mark  ( \/ )  entered  lightly  with  a  sharp- 
pointed  pencil,  just  before  each  amount  in  both  books. 

EXERCISE 

You  may  now  check  the  postings  in  the  model  ledger,  taking  first  the  entries  from  the 
journal  and  then  those  from  the  cash  book.  Use  a  sharp-pointed,  hard  pencil,  and  make  small 
neat  check  marks.  This  work  will  greatly  aid  you  hereafter  in  the  work  of  posting,  the  use 
of  folio  numbers,  etc.  When  you  have  finished  this  exercise,  all  the  entries  in  your  books 
should  show  check-marks. 

The  Trial  Balance.  This  is  a  proof  sheet  in  which  the  balances  of  the  several  accounts 
are  listed  instead  of  the  totals.  Since  the  sum  of  all  the  debits  of  a  properly  kept  set  of  books 
equals  the  sum  of  all  the  credits,  it  is  evident  that  the  sum  of  all  the  debit  balances  of  the 


PART  ONE— MODEL  SET  OF  BOOKS 


35 


RIGHT  FOLIO  OF  THE  CASH  BOOK 


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several  accounts,  must  equal  the  sum  of  all  the  credit  balances.  A  trial  balance  is  usually  taken 
when  the  books  are  to  be  closed  and  a  statement  rendered,  since  the  balances  of  the  several 
accounts,  as  shown  by  the  trial  balance,  are  needed  in  preparing  the  statement.  If  it  is  merely 
required  to  prove  that  books  are  in  balance,  a  proof  sheet  is  taken.  The  latter  is  quite  as  ef- 
fective for  this  purpose  as  a  trial  balance,  and  is  more  easily  prepared.  The  trial  balance  for 
the  Model  Set  is  shown  on  page  39. 

CLOSING  THE  BOOKS 

In  every  business  it  is  desirable  at  certain  times,  usually  once  a  year,  to  summarize  the 
results  of  the  business  in  a  statement  setting  forth  a  schedule  of  the  resources  and  liabilities, 
and  the  various  sources  and  amounts  of  losses  and  gains.  When  such  a  statement  is  prepared, 
it  is  usual  to  close  the  commercial  accounts  or  those  that  show  losses  or  gains,  and  to  reopen 
them  for  a  new  business  period.  The  general  operation  by  which  this  is  accomplished  is 
known  as  closing  the  books.  The  process  of  closing  the  books  involves  five  distinct  steps,  as 
follows : 

1.  The  closing  and  ruling  up  of  the  cash  book  as  shown  on  pages  34  and  35. 

2.  The  preparation  of  a  trial  balance  for  the  purpose  of  showing  that  all  original 
entries  have  been  correctly  posted  to  the  ledger. 

3.  The  making  out  of  inventories,  or  lists,  showing  the  value  of  all  merchandise, 
chattels,  and  other  property  on  hand  at  the  time  of  closing. 

4.  The  preparation  of  a  balance  sheet,  setting  forth  in  proper  form,  a  schedule  of  the 
resources  and  liabilities,  gains  and  losses,  and  present  worth  of  the  proprietor. 

5.  The  closing  and  ruling  up  of  the  accounts  in  the  ledger. 


36 


NEW  INDUCTIVE  BOOKKEEPING 


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40  NEW  INDUCTIVE  BOOKKEEPING 

Inventories.  An  inventory  in  bookkeeping  is  a  list  or  schedule  of  anything  having  a 
value  related  to  the  business,  and  which  at  the  time  of  closing  the  books,  does  not  appear  on 
any  ledger  account.  Inventories  may  represent  either  resources  or  liabilities.  Resource  in- 
ventories may  consist  of  the  estimated  value  of  merchandise,  chattels,  or  other  property  on 
hand,  also  prepaid  rents,  salaries,  insurance,  etc.,  and  accrued  interest  on  notes  owed  to  the 
proprietor.  Liability  inventories  may  include  interest  on  the  firm's  outstanding  notes,  and  un- 
paid salaries,  or  other  firm  debts  not  entered  on  the  books. 

In  the  Model  Set  there  are  four  inventories : 

1.  The  inventory  of  merchandise,  amounting  to  $2817.61. 

2.  The  inventory  of  Expense  items  prepaid,  amounting  to  $40. 

3.  Inventory  of  Teams,  amounting  to  $262.50. 

4.  The  inventory  of  Furniture  and  Fixtures,  amounting  to  $250. 

These  are  entered  among  the  resources  in  the  financial  statement  on  page  39.  Making  an 
inventory  of  the  merchandise  on  hand  is  usually  called  taking  stock.  It  is  done,  as  a  rule, 
once  a  year  and  often  requires  several  days. 

Balance  Sheet.  Many  forms  of  balance  sheets  are  used  by  accountants.  But  for  an 
ordinary  mercantile  business,  the  form  for  the  Model  Set  on  pages  39  and  41,  is  both  simple 
and  practical. 

There  are  usually  four  parts  to  a  complete  balance  sheet,  as  follows : 
.  1.     The  trial  balance  showing  the  balances  of  all  the  accounts  of  the  business. 

2.  The  financial  statement  showing  a  list  of  the  resources  and  liabilities. 

3.  The  statement  of  profits  and  losses,  giving  the  gains  and  losses  as  shown  by  the 
several  accounts. 

4.  The  balance  sheet  proof. 

These  four  parts  of  the  balance  sheet  for  the  Model  Set  are  shown  on  pages  39,  41,  and 
45.     The  student  should  read  carefully  the  following  explanation  of  these  several  forms : 

The  Trial  Balance.  This  exhibits  the  balances  of  the  fourteen  accounts  of  this  busi- 
ness. It  shows  that  the  books  are  in  balance  at  the  time  of  closing,  and  it  supplies  most  of  the 
entries  for  the  other  parts  of  the  balance  sheet. 

The  Financial  Statement.  This  is  a  complete  list  of  the  resources  and  liabilities  of  the 
business,  as  shown  by  the  account  balances  and  inventories.  The  balance  entry,  or  present 
worth  (entered  in  red  ink)  is  found  by  subtracting  the  total  liabilities,  $603,  from  the  total 
resources,  $4700.63.  The  difference,  $4097.63,  is  the  present  worth,  or  Mr.  Bell's  net  capital 
at  the  time  the  books  are  closed. 

The  Statement  of  Profits  and  Losses.  This  is  an  itemized  exhibit  of  profits  and  losses, 
as  shown  by  the  several  commercial  accounts.  The  commercial  accounts  of  the  Model  Set, 
are  Merchandise,  Interest,  Expense,  Teams,  and  Furniture  and  Fixtures.  In  the  exhibit  for 
the  Merchandise  account,  the  total  of  the  sales,  $1055.55,  is  added  to  the  inventory,  $2817.61 , 
giving  $3873.16  for  the  total  credits.  From  this  the  total  cost  of  merchandise  $3384.20  is  de- 
ducted, leaving  $488.96,  for  the  merchandise  gain,  which  is  extended  to  the  first  column. 
The  credit  balance,  or  gain  on  Interest  $6.97,  is  then  entered,  and  the  total  gains  $495.93, 
extended  to  the  second  column. 

As  there  are  no  credits  on  the  Expense  account,  the  net  loss  on  this  account,  $67.65,  is 
found  by  deducting  the  inventory  from  the  total  debits.  The  inventory  of  Teams  is  just 
equal  to  the  cost,  leaving  neither  gain  nor  loss.  From  the  cost  of  Furniture  and  Fixtures, 
we  deduct  the  total  of  the  amount  received  for  sales  and  the  present  inventory  value,  leaving 
a  net  loss  of  $105.40. 

Furniture  and  Fixtures  bought  for  store  use  are  not  usually  sold,  and  if  those  on  hand 
were  given  the  same  valuation  that  was  given  them  on  beginning  business,  or  when  they  were 
purchased,  this  account  would  show  neither  a  gain  nor  loss,  but  being  in  constant  use,  the 
chattels  required  in  a  business  deteriorate  in  value,  and  an  allowance  for  deterioration  (gen- 
erally a  certain  per  cent  of  their  valuation),  is  usualy  made  when  the  inventory  is  taken. 


PART  ONE— MODEL  SET  OF  BOOKS 


41 


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The  sum  of  the  losses  of  Expense,  Teams,  Furniture  and  Fixtures,  $173.05,  is  then  ex- 
tended and  deducted  from  the  total  gains,  leaving  $322.88  for  the  net  gain  of  the  business, 
which,  being  the  balance  of  the  Profit  and  Loss  Statement,  is  entered  in  red  ink,  and  followed 
by  closing  rulings. 

The  Balance  Sheet  Proof.  In  this  form,  the  net  gain,  as  shown  by  the  Profit  and  Loss 
Statement,  $322.88,  is  added  to  the  original  investment,  $3774.75.  The  result,  $4097.63,  is 
entered  in  red  ink,  and  is  the  present  worth  of  the  business.  As  this  result  agrees  with  the 
present  worth,  as  shown  by  the  financial  statement,  the  balance  sheet  is  said  to  "prove." 

Arrangements  of  Accounts  in  the  Ledger.  With  reference  to  their  position  in  the 
ledger,  accounts  may  be  conveniently  divided  into  two  groups.  (1)  Personal  Accounts,  and 
(2)  General  Accounts,  which  terms  include  the  account  with  the  proprietor  or  partners,  and 
all  other  accounts  except  persons  to  whom  we  sell  or  from  whom  we  buy  on  credit.  (Accounts 
Receivable  and  Accounts  Payable.) 

Since  the  general  accounts  are  known  and  are  few  in  number,  their  titles  and  the  ledger 


42  NEW  INDUCTIVE  BOOKKEEPING 

space  to  be  reserved  for  them  can  usually  be  determined  at  the  time  the  books  are  opened.  As 
a  rule,  the  proprietors'  investment  accounts  come  first,  and  these  are  followed  by  the  othet 
general  accounts.  The  relative  position  of  the  latter  is  usually  immaterial,  and  the  space  to 
be  reserved  for  them  will  depend  on  the  nature  of  the  business. 

It  may  or  may  not  be  desirable  to  have  the  accounts  receivable  and  the  accounts  payable 
occupy  different  parts  of  the  ledger.  Ordinarily  the  personal  accounts  are  opened  in  their 
proper  order,  as  determined  by  the  posting.  The  order  of  posting  the  books  of  original  entry 
is  usually  as  follows : 

(1)  journal,  (2)  cash  book,  (3)  purchase  book,  (4)  sales  book.  This  order  of  posting 
will  be  followed  in  the  sets  of  this  book. 

Closing  the  Ledger.  To  close  a  ledger  is  to  balance  and  rule  up  the  commercial  ac- 
counts, also,  any  other  accounts  that  are  in  balance,  and  which  are  not  to  be  continued.  If 
the  business  is  to  go  on,  the  financial  accounts  are  not  usually  closed. 

The  Loss  and  Gain  Account.  An  account  under  this  title  is  sometimes  carried  on  the 
ledger  for  the  purpose  of  showing  certain  exceptional  losses  or  gains,  that  cannot  consistently 
be  entered  in  other  accounts.  Thus,  if  we  were  to  lose  a  sum  of  money  by  theft  or  otherwise, 
or  if  we  were  to  lose  a  debt  through  the  failure  or  bankruptcy  of  a  debtor,  such  losses  would 
be  charged  directly  to  the  Loss  and  Gain  account.  Also,  if  the  business  were  to  gain  cash  or 
property  through  some  exceptional  circumstances,  or  if  a  bankrupt  debtor  whose  account  had 
been  closed  into  Loss  and  Gain,  were  afterward  to  pay  us  what  he  owes  or  any  portion  of  it, 
the  gain  would  be  credited  to  Loss  and  Gain. 

In  a  complete  scheme  of  accounting,  it  is  usually  advisable  to  keep  tivo  accounts  under 
this  title.  The  first,  "Loss  and  Gain,"  is  for  the  entry  of  the  exceptional  losses  and  gains  al- 
ready mentioned.  The  other  title  is  "Loss  and  Gain  Closing."  This  account  is  used  to  ex- 
hibit the  amount  of  net  loss  or  net  gain,  as  shown  by  Expense,  Merchandise,  Interest,  and 
other  commercial  accounts.  These  items  are  entered  in  the  Loss  and  Gain  Closing  account 
only  at  the  time  the  ledger  is  closed,  and  as  a  part  of  such  closing.  Thus,  the  Loss  and  Gain 
Closing  account  for  the  Model  Set  on  page  44  shows  the  items  of  gain  or  loss  exhibited  by  the 
profit  and  loss  statement  for  the  accounts  with  Merchandise,  Interest,  Expense,  Teams,  and 
Furniture  and  Fixtures. 

Procedure  in  Closing  the  Ledger.  In  the  process  of  closing  the  ledger,  the  following 
steps  are  taken  in  the  order  given.  Let  the  student  study  these  and  the  closed  accounts  on 
pages  43  and  44. 

1.  The  inventories  of  Merchandise,  Expense,  Teams,  and  Furniture  and  Fixtures  (as 
shown  by  the  financial  statement)  are  entered  in  red  ink  on  the  credit  side  of  these  accounts. 
(Find  these  entries.) 

Red  Ink  Entries.  It  is  well  here  to  note  the  use  and  purpose  of  red  ink  entries.  The  ob- 
ject of  using  red  ink  in  a  ledger  entry  is  two-fold:  (1)  to  indicate  that  the  entry  has  not 
been  transferred  from  any  other  book  of  record  or  account,  (2)  to  show  that  the  opposite 
debit  or  credit  is  to  be  made  later  on.  Thus,  in  your  present  closing,  the  Merchandise  gain 
is  entered  in  red  ink  on  the  Merchandise  account,  for  the  reason  that  this  entry  was  not  trans- 
ferred from  any  other  book  or  account.  The  same  rule  holds  in  the  case  of  the  loss  entries 
on  Expense  and  Furniture  and  Fixtures.  But  when  these  entries  are  transferred  to  "Loss  and 
Gain  Closing,"  they  are  entered  in  black  ink  for  the  reason  that  on  this  account  they  are  trans- 
ferred entries. 

From  the  foregoing  rules,  it  follows  that  all  closing  or  balancing  entries,  also,  all  inven- 
tory entries,  are  to  be  entered  in  red.  In  general,  the  red  entry  may  be  considered  as  a  sort 
of  "danger  signal,"  indicating  that  the  entry  has  not  come  to  the  account  in  the  usual  way, 
and  that  it  is  yet  to  be  forwarded  in  order  to  restore  the  balance  of  the  ledger. 

2.  A  new  ledger  account  is  opened  under  the  title  "Loss  and  Gain  Closing."  The  ac- 
counts with  Merchandise,  Expense,  Furniture  and  Fixtures,  and  Interest,  are  then  closed  into 
this  account  as  follows:  The  net  gain  on  Merchandise  fas  shown  by  the  statement  of  profits 
and  losses).  $488.96.  is  entered  in  red  ink  on  the  debit  side  of  Merchandise,  and  in  black  ink 
on  the  credit  side  of  Loss  and  Gain  Closing.     The  Merchandise  account  is  then  ruled  up. 


PART  ONE— MODEL  SET  OF  BOOKS 


43 


PAGE  ONE  OF  THE  CLOSED  LEDGER 


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44 


NEW  INDUCTIVE  BOOKKEEPING 


PAGE  TWO  OF  THE  CLOSED  LEDGER 


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PART  ONE— MODEL  SET  OF  BOOKS 


45 


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(See  the  model  form,  page  43.)  The  loss  on  Expense,  $67.65,  is  entered  in  red  ink  on  the 
credit  side  of  that  account,  and  in  black  ink  on  the  debit  side  of  the  Loss  and  Gain  Cosing, 
and  the  Expense  account  is  ruled  up.  The  loss  on  Furniture  and  Fixtures,  $105.40,  is  en- 
tered in  red  ink  on  the  credit  side  of  that  account,  and  in  black  ink  on  the  debit  side  of  the 
Loss  and  Gain  Closing,  and  Furniture  and  Fixtures  account  is  ruled  up.  The  gain  on  Inter- 
est, $6.97,  is  entered  in  red  ink  on  the  debit  side  of  that  account,  and  in  black  ink  on  the 
credit  side  of  the  Loss  and  Gain  Closing,  and  the  Interest  account  is  ruled  up. 

The  Loss  and  Gain  Closing  account  now  chows  all  the  losses  of  the  business  on  its  debit 
side,  and  all  the  gains  on  the  credit  side.  The  balance  of  this  account,  or  net  gain,  $322.88, 
is  now  entered  in  red  ink  on  the  debit  side  of  the  account,  and  in  black  ink  on  the  credit  side 
of  C.  A.  Bell,  Investment.  The  Loss  and  Gain  Closing  account  is  then  ruled  up.  The  bal- 
ance of  the  proprietor's  investment  account,  $4097.63,  is  now  entered  in  red  ink  on  the  debit 
side  and  the  account  is  ruled  up. 

To  put  the  ledger  in  form  to  show  the  results  of  the  next  business  period,  it  is  now  neces- 
sary to  forward  such  balances  or  inventories  of  the  closed  accounts  as  represent  resources  or 
liabilities.  These  are  the  several  inventories  of  the  Merchandise,  Expense,  Teams,  and  Fur- 
niture and  Fixtures,  and  the  present  worth  or  net  present  investment  of  the  proprietor. 
These  amounts  are  now  forwarded  to  the  opposite  sides  of  the  several  accounts,  and  entered 
in  black  ink  just  below  the  closing  rulings.     (Find  these  forwarded  amounts.) 

Trial  Balance  After  Closing.  After  the  several  inventories  and  the  balance  of  the  pro- 
prietor's account  have  been  forwarded,  the  ledger  should  be-  in  balance,  but  in  order  to  be 
sure  that  no  mistakes  have  been  made  in  forwarding  balances,  etc.,  it  is  well  to  take  a  trial 
balance  of  the  ledger  as  it  now  stands.  This  trial  balance  after  closing  takes  the  place  of  the 
opening  entry  at  the  beginning  of  the  business,  in  showing  that  the  books  are  in  balance  at 
the  commencement  of  the  new  business  period.  This  trial  balance  for  the  Model  Set  is  shown 
on  this  page. 

Note. — A  trial  balance  taken  after  the  books  are  closed,  is  sometimes  called  a  balance  of  balances,  as 
it  is  made  up  mainly  of  forward  balances  of  the  closed  accounts. 


46 


NEW  INDUCTIVE  BOOKKEEPING 


Closing  the  Ledger  from  Journal  Entries.  The  method  of  closing  the  ledger  that  we 
have  presented  on  the  preceding  page,  is  the  one  most  commonly  used,  and  it  might  be  called 
the  balance  sheet  method,  since  the  closing  ledger  entries  are  taken  directly  from  the  balance 
sheet.  But  some  authors  and  accountants  advocate  the  closing  of  the  ledger  by  means  of 
journal  entries.  In  order  that  the  student  may  understand  both  of  these  methods,  we  will 
now  exemplify  the  journal  entry  method,  as  applied  to  the  Model  Set. 

The  first  step  in  this  process  is  to  list  in  the  journal,  all  the  inventories  of  the  business  at 
the  time  of  closing.     This  entry  for  the  Model  Set  would  be  as  follows : 

19— 

Jan.  31.     Inventories  on  closing  the  books  this  date: 

Merchandise,  stock  of  goods  on  hand    $2817.64 

Expense,  remainder  of  coal  on  hand  and  other  prepaid  expenses .       40.00 

Teams,  horse  and  wagon  at  cost 262.50 

Furniture  and  Fixtures 250.00 

These  entries  are  then  posted  to  the  several  accounts  in  red  ink  and  the  folio  numbers  are 
entered  as  in  the  case  of  other  postings. 

The  next  step  is  to  prepare  from  the  data  presented  in  the  balance  sheet,  three  journal 
entries,  which,  when  posted,  will  put  the  commercial  accounts  in  balance. 

CLOSING  JOURNAL  ENTRIES,  C.  A.  BELL 


Jan. 


31 


Merchandise 
Interest 

Loss  and  Gain  Closing 

Loss  and  Gain  Closing 
Expense 
Furniture  and  Fixtures 

Loss  and  Gain  Closing 
C.  A.  Bell,  Investment 


Gain  as  per  balance  sheet  of 
this  date 


Losses  as  per  balance  sheet 
of  this  date 


Net  Gain  as  per  balance  sheet 
of  this  date 


48896 
697 


17305 


322 


49593 


6765 


105 


32288 


40 


When  these  entries  are  posted,  the  proprietor's  investment  account  is  balanced  by  enter- 
ing the  present  worth  on  the  debit  side  in  red  ink,  and  the  several  accounts  affected  are  ruled 
up,  as  in  the  ordinary  method  of  closing.  The  inventories  and  the  balance  of  the  invest- 
ment account  are  then  forwarded,  and  the  "trial  balance  after  closing"  is  taken  as  in  the 
previous  method  of  closing. 

The  advantages  claimed  for  the  journal  entry  method  of  closing  are : 

1.  A  permanent  record  of  all  the  data  used  in  closing  the  books,  presented  systematic- 
ally, in  the  book  of  original  entry. 

2.  The  closing  ledger  entries  come,  in  a  regular  way,  from  the  journal  to  which  they 
may  be  easily  traced,  instead  of  coming  in  an  irregular  way  from  the  balance  sheet. 

3.  A  reduction  in  the  number  of  entries  on  the  Loss  and  Gain  Closing  account  and  also, 
of  the  number  of  red  ink  entries.  (The  closing  entries,  being  posted  from  the  journal,  like 
other  entries,  do  not  need  to  be  in  red  ink.) 


Set  One— Jobbing  Grocery  Business 


TRANSACTIONS  AND  RECORDS 

A  business  transaction,  unless  it  is  a  simple  exchange  of  one  commodity  for  another, 
involves  three  things: 

(1)  The  exchange  of  values,  (2)  the  proper  papers  giving  the  facts  or  conditions  agreed 
upon,  (3)  the  record  of  the  transaction.  The  papers  pertaining  to  transactions  consist  of 
various  standard  forms  commonly  used  in  business  offices,  such  as  checks,  bills,  notes,  re- 
ceipts, etc.     These  are  spoken  of  generally  as  "Business  Forms." 

The  Plan  of  this  actual  business  set  is  to  have  the  student  engage  in  business  for  him- 
self, carry  out  the  business  transactions,  write  the  proper  business  forms,  and  keep  books  as 
far  as  is  practicable,  exactly  as  he  would  do  in  real  business.  He  is  to  buy  and  sell  and  en- 
gage in  other  business  dealings,  strictly  in  accordance  with  the  instructions  accompanying 
the  Routine  of  Transactions. 

Before  proceeding   further  you  may   read  very  carefully  the  following 

SPECIAL  DIRECTIONS 

1.  Be  scrupulously  neat  in  everything.  See  that  you  have  good  pens  and  ink,  and  that 
your  desk  is  provided  with  blotters,  pen-wipers,  etc.  Keep  your  hands  clean,  your  desk  free 
from  dust,  and  do  not  allow  your  pens  to  become  rusted  or  clogged  with  ink.  Remember 
that  in  bookkeeping,  neatness  and  order  are  sovereign  virtues. 

2.  Read  all  instructions  with  the  greatest  care,  and  be  sure  that  you  understand  them 
before  attempting  to  carry  them  out. 

3.  Do  not  allow  your  books  to  be  open  except  when  in  actual  use.  Never  let  your 
hands  copie  in  contact  with  the  pages  of  your  books.  Place  a  sheet  of  waste  paper  under 
your  hand  whenever  writing  in  the  book.  When  you  stop  work,  replace  your  books,  etc.,  in 
your  desk  in  a  neat  and  orderly  manner. 

4.  Do  not  go  to  your  teacher  for  information  about  any  matter  until  you  have  care- 
fully studied  all  instructions  relating  to  it.  Take  pride  in  doing  your  own  thinking,  and  in 
getting  along,  as  far  as  possible,  without  help.  In  business  and  bookkeeping,  as  in  other 
things,  self-reliance  is  essential  to  success. 

5.  Be  exact  in  all  arithmetical  calculation.  Remember  that  one  slight  error  may  cause 
you  much  trouble.  Perform  all  additions,  subtractions,  and  multiplications  a  second  time  be- 
fore recording  the  result.  In  your  additions,  add  the  columns  from  the  top  downward,  as 
well  as  from  the  bottom  upward.  In  transferring  figures  from  one  place  or  book  to  another, 
be  careful  not  to  transpose  the  figures,  writing  $25.63  for  $23.65,  etc.  Do  not  try  to  be 
"smart,"  and  work  too  rapidly  for  accuracy.  In  bookkeeping,  especially  in  the  case  of  a 
beginner,  it  pays  to  "make  haste  slowly." 

Your  First  Business  is  that  of  a  "Jobber,"  or  speculative  dealer  in  certain  lines  of 
groceries  and  general  produce.  The  transactions  for  your  business  will  be  numbered  and 
outlined  under  the  heading,  "Routine  of  Transactions."  These  will  be  accompanied  with  cer- 
tain necessary  explanations,  illustrations,  etc.,  which  you  should  always  study  carefully  until 
you  understand  them  clearly,  before  attempting  to  carry  out  the  transactions  relating  to 
them. 

If  you  have  read  the  foregoing  instructions,  and  believe  that  you  understand  them,  you 
may  now  proceed  to  carry  out  the  transactions  given  on  the  succeeding  pages. 

—47— 


48  NEW  INDUCTIVE  BOOKKEEPING 

Preparing  Your  Blanks.  If  loose  leaf  blanks  are  used,  the  student  will  place  ruled 
paper  in  the  binders  for  this  set,  as  follows : 

Journal,  Notes,  and  Cash 

1st  Cord — 1  sheet  journal  ruling  for  Journal. 

2d  Cord — 2  sheets  journal  ruling  for  Cash  Book. 

Purchases  and  Sales 

1st  Cord — 3  sheets  journal  ruling  for  Sales  Book. 

Ledger  and  Trial  Balances 

1st  Cord — 2  sheets  2  account  ledger  with  index  tip  for  ledger. 

2nd  Cord — 2  sheets  journal  ruling  for  Trial  Balances  and  Statements. 

The  journal  section  should  be  paged  from  1  to  4,  the  cash  book  section  should  be 
paged  as  a  separate  book  from  1  to  8,  the  sales  book  from  1  to  12,  and  the  ledger  (omitting 
the  index)  from  1  to  8.  If  bound  blanks  are  used,  the  student  will  page  each  of  the  four 
books  required  before  making  any  entries  in  the  blanks. 

It  will  be  observed  that  the  odd  page-numbers  should  be  written  in  the  upper  right-hand 
corners  and  the  even  page-numbers  in  the  upper  left-hand  corners,  as  in  the  paging  of  any 
book. 

At  the  beginning  of  this  business,  you  are  to  use  a  journal,  a  cash  book,  and  a  ledger; 
later  on  in  the  work,  a  sales  book  will  be  introduced. 

If  you  have  not  already  made  yourself  familiar  with  the  use  of  the  journal  and  cash 
book,  as  explained  on  pages  27  and  31,  read  these  explanations  carefully  and  note  the  method 
of  making  entries  in  these  books  as  shown  in  die  Model  Set,  pages  32,  34,  and  35. 

ROUTINE  OF  TRANSACTIONS 

1.  Begin  the  Jobbing  Grocery  business  with  cash  $2500  (4 — $500  and  5— $100  > 
which  you  will  take  from  the  Community  Cash  envelope.  If  the  Community  Cash  envelope 
is  not  used  you  will  receive  it  from  your  teacher.  This  is  your  cash  capital  and  it  should 
be  placed  in  the  cash  compartment  of  your  office  file. 

Note. — For  the  convenience  of  student  and  teacher,  the  transactions  have  been  numbered  in  bold 
faced  figures.  These  figures  do  not  represent  dates,  but  for  convenient  reference  they  should  be  recorded 
on  the  left  margin  of  journal,  cash  book,  and  sales  book,  and  in  the  explanation  column  of  the  ledger. 

Counting  Money.  The  ability  to  count  money  accurately  and  quickly  is  an  important 
business  qualification.  In  case  a  considerable  sum  is  to  be  counted,  put  the  bills  or  coins  of 
the  same  denomination  in  separate  piles,  or  in  such  combinations  as  to  make  amounts  of  $100, 
$20,  $10,  $5,  or  $1  each.  These  amounts  are  then  added  and  the  result  recorded.  The 
money  should  then  be  recounted,  the  coins  and  bills  being  combined  and  added  in  different 
order.  Unless  the  sum  is  very  small,  never  attempt  to  count  money  by  taking  the  bills  or 
coins  "just  as  they  come,"  large  and  small  denominations  alike.  In  receiving  money,  or  in 
paying  it  out,  always  count  and  recount  the  sums  to  insure  its  correctness. 

Opening  Entry.  When  one  engages  in  a  business  for  himself  or  with  others,  it  is  cus- 
tomary to  write  a  short  statement  setting  forth  the  name  of  the  business,  the  date  and  place 
of  beginning,  the  person  or  persons  by  whom  it  is  to  be  carried  on,  the  amount  and  kind  of 
capital  invested,  etc.  This  statement  is  usually  written  in  the  journal,  and  the  statement 
itself  is  called  the  Opening  Entry. 

On  page  1  of  your  journal,  write  your  place  of  business  and  the  current  date  above  the 
ruled  headings.  Below  these  lines  make  your  opening  entry,  following  the  form  given  on 
the  next  page,  with  your  name  as  proprietor  instead  of  T.  M.  Carpenter.  When  your  opening 
entry  is  prepared,  submit  it  to  your  teacher  for  approval. 

Note. — As  this  is  a  mere  memorandum  entry,  the  amount  is  not  entered  in  the  money  columns  of 
the  journal,  but  in  the  cash  book. 


SET  ONE— JOBBING  GROCERY  BUSINESS 


49 


OPENING  ENTRY  IN  THE  JOURNAL 


\=£^&Z^&^^^ 


^c^a^sy    <^-gg^-?^^--^g<-^^>z--«g^^-<^^gX^ 


C^C^^^z^t^c/. 


L^tZ_^</i-' 


tz*f '  <-^Le~^v^£^iJ&C4' \^€^iS  <t^^L^y 


^^-^^.^/^^  ^  Jzj-JX. 


,  Note.— The  student  will  notice  that  in  the  ruled  paper  supplied  with  his  outfit,  there  are  certain 
faint  blue  lines,  that,  for  mechanical  reasons,  have  not  been  reproduced  in  the  forms  here  given.  The  faint 
line  in  the  middle  of  the  page  is  to  separate  ledger  titles  from  explanations  in  journal  and  cash  book.  In 
case  of  "memorandum  entries"  (like  the  opening  entry  here  given),  and  in  trial  balances  and  other  rec- 
ords, the  blue  line  need  not  be  regarded  in  making  the  entries.  The  blue  lines  in  the  money  columns  are 
for  convenience  in  keeping  the  figures  in  right  columnar  order.     They  are  called  "unit  rulings." 

The  following  entry  is  now  to  be  made  on  the  first  debit  page  of  your  cash  book  (page 
2),  substituting  your  own  name  in  place  of  T.  M.   Carpenter. 

Note. — Use  the  date  of  the  transaction  and  the  folio  or  page  entries  as  required  by  your  own  blank 
books,  instead  of  those  given  in  the  illustrative  entries. 

FIRST  DEBIT  ENTRY  IN  CASH  BOOK,  WITH  THE  CORRESPONDING  CREDIT  TITLE 


^^^^ 


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^^^^c^^L^rjJyCe^^ 


2J-* 


You  have  already  learned  that  for  every  entry  in  any  account,  there  is  an  equal  and 
opposite  entry  in  some  other  account.  You  now  have  a  debit  entry  of  $2500  in  your  cash 
account,  but  as  yet  you  have  not  entered  the  corresponding  credit.  This  credit  is  now  to  be 
entered,  or  "posted,"  to  the  credit  side  of  your  investment  account,  which  is  to  be  opened 
on  the  first  page  of  your  ledger.  When  the  account  is  opened  and  the  required  credit  entry 
made,  it  should  appear  as  follows,  substituting  your  name  and  using  the  current  date. 

FIRST  LEDGER  ENTRY 


// 

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1^0  ^ 


Indexing  the  Ledger.  For  convenience  in  locating  accounts  in  the  ledger,  index  sheets 
are  usually  included  in  the  front  of  the  book,  a  page  or  part  of  a  page  being  devoted  to  each 
letter  of  the  alphabet.     All  surnames  of  persons  and  all  other  titles  of  accounts  beginning  with 


50  NEW  INDUCTIVE  BOOKKEEPING 


a  particular  letter  of  the  alphabet  should  be  entered  in  the  index  in  the  space  assigned  to  that 
letter,  and  opposite  each  title  is  a  space  for  recording  the  number  of  the  ledger  page  occupied 
by  the  account. 

You  may  now  index  your  investment  account  by  writing  your  name  under  the  proper 
initial  letter  in  the  Index.  Write  your  surname  first,  then  the  initials,  and  the  page  of  the 
ledger  (1)  where  your  account  appears.  Thus,  if  your  name  were  T.  M.  Carpenter,  the  Index 
entry  would  be  under  the  letter  C,  and  would  read  "Carpenter,  T.  M.,  Investment,  1." 

Note. — Two  accounts  are  often  kept  with  the  proprietor,  or  with  the  partners,  if  the  business  is  a 
partnership.  The  one  is  for  transactions  relating  to  his  investment,  and  the  other  for  mere  personal 
debits  or  credits.  These  accounts  are  distinguished  respectively  by  using  the  words  "Investment"  or  "Per- 
sonal" after  the  account  title. 

Now  credit  your  investment  account  with  the  $2500,  entering  the  initial  "C"  in  the  ex- 
planation column  of  the  ledger,  to  show  that  the  amount  has  been  transferred  or  "posted" 
from  the  cash  book. 

Read  "Post-Marking,"  page  31,  then  enter  the  proper  pages  in  the  folio  column  of  your 
ledger  and  cash  book  as  required  by  the  last  transaction. 

2.  Rent  a  store  room  from  the  Enterprise  Real  Estate  Co.,  paying  $40  for  the  first 
month's  rent  and  taking  a  receipt  for  same. 

All  business  transactions  in  this  course  are  adapted  to  either  the  office  or  the  tablet  method  of  busi- 
ness practice.  In  the  office  method  the  student  will  carry  out  the  given  transaction  at  one  of  the  office  de- 
partments, and  in  the  tablet  course  all  transactions  will  be  carried  out  by  means  of  tablet  forms  and  en- 
velopes in  his  equipment.  Instructions  pertaining  especially  to  the  office  method  will  be  given  in  short 
lines  on  the  left  half  of  the  page,  and  instructions  for  the  tablet  method  will  be  given  on  the  right  half  of 
the  page.     All  lines  extending  across  the  page  are  intended  for  both  courses. 

If  you  are  to  use  the  Tablet  form  of  the  work,  the  incoming  papers,  (that  is,  those  you 
are  supposed  to  receive  from  those  with  whom  you  do  business)  are  supplied  by  means  of 
small  booklets,  which  are  included  in  your  bookkeeping  equipment. 

In  the  incoming  papers  from  the  booklets,  the  place  of  business  and  date  are  left  blank, 
and  there  is  a  blank  space  for  the  student's  name.  These  blank  spaces  should  be  properly 
filled  as  the  papers  are  received.  In  business,  the  papers  would,  of  course,  be  complete,  but  in 
this  work  the  space  for  the  date  and  the  receiver's  name  are  left  blank  in  order  that  the  stu- 
dent may  use  the  name  of  his  own  town,  the  current  date,  and  his  own  name  in  carrying  out 
the  transactions. 

Office  Course.     Carry  out  this  transaction  at  Tablet  Course.     Place    the    currency  in  your 

the  Real  Estate  Office,  or  at  the  Commercial  Ex-  envelope  marked  "Commercial  Cash,"  and  take  the 
change,  as  your  teacher  may  direct.  receipt,  which  will  be  found  in  the  first  page  of 

your  Commercial  Exchange  booklet.  Fill  out  this 
receipt  with  the  town,  date,  and  your  own  name,  as 
instructed  in  the  previous  paragraph. 

Disposal  of  Receipts.  A  receipt,  a  receipted  bill,  or  any  similar  evidence  of  a  payment, 
is  called  a  voucher.  Such'  vouchers  are  always  kept  on  file.  In  this  course  they  should  be 
placed  in  the  envelope  marked  "Receipts  and  Vouchers." 

Making  Change.  If  in  making  payments  in  this  or  any  future  transaction  in  this 
course,  you  do  not  have  the  exact  change  in  your  cash  envelope,  use  bills  of  larger  denomina- 
tion and  take  change  from  Community  Cash.  If  you  are  using  the  "Office  Course,"  change 
will  be  made  at  the  office  where  the  transaction  is  carried  out. 

This  payment  is  to  be  charged  to  "Expense"  as  per  the  following  entry  on  the  credit 
side  of  the  cash  book. 

Note. — The  ledger  folio  is  not  to  be  entered  on  the  cash  book  until  the  amount  has  been  posted. 


SET  ONE— JOBBING  GROCERY  BUSINESS 


FIRST  CREDIT  ENTRY  IN  CASH  BOOK,  WITH  THE  CORRESPONDING  DEBIT  TITLE 


<g^ 


You  will  now  open  your  Expense  account  on  the  first  division  of  page  2  of  your  ledger 
and  index  it  under  "E"  in  the  index,  writing  "2"  after  the  title  in  the  index.  Next  post  the 
expense  entry  in  the  cash  book  to  the  debit  side  of  the  Expense  account,  making  the  neces- 
sary folio  entries  and  explanation.  In  this  and  in  all  future  entries,  use  the  current  date,  and 
do  not  forget  to  enter  the  year  at  the  head  of  the  date  column,  as  shown  in  the  form. 


THE  SECOND  TITLE  IN  THE  LEDGER 


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3.     Buy  a  lot  of  furniture  and  fixtures   for    your    store    room,  consisting  of  shelving, 
counter,  scales,  office  desk,  chairs,  etc.,  paying  cash  for  same,  $168. 


Office  Course.  Receive  a  receipted  bill  for  the 
furniture,  etc.,  at  the  Commercial  Exchange,  giving 
the  cash  in  payment  there,  delivering  a  larger 
amount  and  receiving  change  if  you  cannot  make 
the  exact  change. 


Tablet  Course.  Place  the  currency  in  Com- 
munity Cash,  taking  change  if  necessary. 

The  receipted  bill  from  the  Spokane  Furni- 
ture Co.  will  be  found  in  your  Commercial  Ex- 
change pad.  Remove  and  properly  fill  out  this  in- 
voice, entering  the  name  of  your  town,  the  date,  and 
your  own  name,  as  in  the  case  of  the  receipt  re- 
ceived in  Transaction  2. 


Invoices  and  Bills.  When  goods  are  soid,  it 'is  usual  for  the  seller  to  give  to  the  buyer 
a  complete  list  of  the  goods  sold,  with  prices,  terms,  discounts,  and  amounts.  Such  a  list  is 
called  by  the  buyer  an  Invoice  and  by  the  seller  a  Bill.  When  a  bill  is  paid,  the  seller  usually 
receipts  for  the  payment  by  writing  the  word  "Paid,"  or  "Received  Payment,"  below  the  list 
of  items,  and  signs  the  firm  name.  A  bill  thus  receipted  is  a  voucher  and  should  be  kept  on 
file  as  an  evidence  of  the  payment.  In  the  present  course  your  invoices  are  to  be  filed  with 
"Receipts  and  Vouchers." 

Note. — An  invoice  or  other  voucher,  should,  of  course,  not  be  filed  until  the  entry  has  been  made  in 
the  cash  book  or  other  book  of  original  entry. 

Numbering  Invoices.  It  is  a  great  convenience  in  bookkeeping  to  number  all  invoices 
in  the  order  that  they  are  received.     The  number  is  usually  entered  on  the  left-hand  margin. 

You  may  now  number  the  invoice  received  in  the  last  transaction,  by  writing  "No.  1" 
near  the  left  margin. 

The  Furniture  and  Fixtures  Account.  The  purpose  of  this  account  is  stated  on 
page  20.  The  account  is  debited  whenever  we  buy  anything  included  under  its  title,  which 
is  needed  in  carrying  on  the  business.  It  would  be  credited  if  any  of  this  property  were 
afterwards  sold,  but  this  seldom  occurs. 


52 


NEW  INDUCTIVE  BOOKKEEPING 


You  may  now  make  a  credit  entry  in  your  cash  book  for  the  purchase  of  the  furniture, 
etc.,  bought  in  the  last  transaction.  Except  the  date,  your  entry  is  the  same  as  the  second 
entry  in  the  form  shown  below. 

FIRST  TWO  CREDIT  ENTRIES  IN  CASH  BOOK 


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Open  an  account  with  "Furniture  and  Fixtures"  on  the  lower  half  of  page  2  in  your 
ledger.  Index  this  account  as  previously  instructed  and  then  post  your  last  cash  book  entry 
to  the  debit  side  of  the  account  as  shown  in  the  accompanying  form.  Enter  the  cash  book 
initial  "C"  and  page  "3"  in  the  folio  column  of  the  ledger  and  the  ledger  page  "2"  in  the 
folio  column  of  the  cash  book. 


THE  THIRD  TITLE  IN  THE  LEDGER 


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£j_S 


Now,  file  your  Invoice  No.  1  in  "Receipts  and  Vouchers." 
4.     Pay  cash  for  cleaning  your  store  room,  $2. 


Tablet  Course.     Deliver  the  currency  In  Com- 
munity Cash  as  usual.     No  receipt. 


Office    Course.     Make    this    payment    at    the  . 
Commercial  Exchange  without  taking  a  receipt.    De- 
liver with  the  money  a  slip  of  paper  with  the  ex- 
planation :    "For  cleaning  store  room." 

This  transaction  credits  Cash  and  debits  Expense,  the  same  as  in  Transaction  2.  Enter 
the  cash  credit  in  the  cash  book  and  post  the  debit  in  the  second  line  of  Expense  account  in 
the  ledger.  Write  the  page  of  the  cash  book  3  in  the  folio  column  of  the  ledger  and  the 
ledger  page  2  in  the  folio  column  of  the  cash  book. 

5.  Buy  of  the  National  Register  Co.  a  cash  register  for  use  in  your  store,  paying  cash 
for  same,  $60. 

Office  Course.     Make    this    purchase    at    the  Tablet  Course.    Deliver  the  currency  as  usual 
Commercial  Exchange,  taking  a  receipted  bill,  and  and  take  a  receipted  bill  from  your  Commercial  Ex- 
delivering  a  ticket  with  the  currency  for  filing  in  change  pad.     Fill  out,  and  number  the  invoice   (No. 
the  office.     Number   the   invoice    (No.   2),   as   pre-  2)   as  previously  instructed, 
viously  instructed. 

In  this  transaction,  Cash  is  credited  and  Furniture  and  Fixtures  is  debited  as  in  Transac- 
tion 3.  Make  similar  entries  in  the  cash  book  and  ledger,  and  enter  the  page-numbers  in 
the  folio  columns  as  previously  instructed. 

6.  You  are  now  to  purchase  for  cash  a  bill  of  Merchandise  from  Dalton  &  White, 
amounting  to  $289,75, 


SET  ONE— JOBBING  GROCERY  BUSINESS  63 

" — 1 — — — 1 ' 

Notice.  If  you  are  using  the  Office  Course  and  are  to  deal  through  a  General  Whole- 
sale Office,  enquire  of  your  teacher  as  to  the  firm  from  which  you  are  to  make  this  and  sub- 
sequent purchases.  You  will  then  make  all  your  purchases  from  this  firm  instead  of.  from 
the  firm  named  in  your  text. 

The  Duplicate  Order  Book.  In  ordering  goods  at  wholesale,  the  buyer  usually 
makes  a  memorandum  of  the  amounts  and  kinds  of  goods  ordered.  When  the  seller  delivers 
the  goods  with  the  invoice,  the  buyer  compares  these  with  his  order  sheet  to  see  if  the  goods 
delivered  are  the  ones  ordered.  To  avoid  errors  or  misunderstandings,  a  carbon  duplicate  of 
the  order  is  made,  one  copy  is  delivered  to  the  seller,  while  the  other  is  retained  by  the  buyer. 
When  goods  are  ordered  through  a  salesman,  the  latter  prepares  the  order,  delivering  one 
copy  to  the  buyer  and  the  other  to  his  firm. 

In  this  course  you  are  to  make  out  duplicate  orders  of  all  Merchandise  purchased,  your 
"Duplicate  Order  Pad"  being  used  for  the  purpose.  Instructions  as  to  using  this  pad  will 
be  found  on  the  cover.  The  following  is  the  form,  except  as  to  name  and  date,  required 
for  the  present  order  from  Dalton  &  White,  (or  from  the  wholesale  firm  designated  by  your 
teacher). 

LOCAL  ORDER  TICKET 


Phase  Deliver - 


Terms 


You  may  now  prepare  duplicate  copies  of  the  above  order,  in  your  Duplicate  Order 
Pad.  Using  the  paper  cutter,  carefully  tear  out  the  original,  (that  is  the  first,  or  white  sheet) 
for  delivery  to  Dalton  &  White. 

Office  Course.    Deliver  the  order  to  the  Com-  Tablet    Course.    Deliver    the    order    through 

mercial  Exchange  or  to  the  Wholesale  Office,  re-  "Outgoing  Papers,"  and  receive  from  the  Wholesale 
ceiving  a  receipted  bill  and  the  merchandise  tick-  pad  the  receipted  bill  and  merchandise  tickets  from 
ets,  paying  cash  for  the  same.  Fill  out  and  number  Dalton  &  White.  Pay  the  required  cash .  through 
the  invoice   (No.  3).  Community   Cash  as  in  the  case  of  previous  cash 

purchases.   Fill  out  and  number  the  invoice  (No.  3). 

Verify  the  invoice,  comparing  the  quantities  represented  on  the  merchandise  cards  with 
the  items  in  the  invoice,  and  see  that  all  amounts  are  extended  correctly. 

Use  your  paper  cutter  or  ruler  in  separating  the  merchandise  tickets  in  slips  from  right 
to  left,  spacing  these  slips  in  your  compartment  "Merchandise." 

This  transaction  requires  the  opening  of  an  account  with  Merchandise.  The  debits  and 
credits  involved  are  discussed  in  connection  with  Application  2  on  page  7.  The  accompany- 
ing form  shows  the  credit  side  of  your  cash  book  as  it  should  appear  after  the  present  trans- 
action is  entered,  and  before  it  is  posted  to  the  ledger.  The  entry  for  this  transaction  is 
shown  on  the  last  line.    Use  the  current  date,  as  heretofore,  for  all  transactions. 


54 


NEW  INDUCTIVE  BOOKKEEPING 


FIRST  FIVE  CREDIT  ENTRIES  IN  THE  CASH  BOOK,  FIRST  FOUR  HAVING  BEEN 

POSTED 


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2Joc4^i/X   c&z^A^     W^g^.^*. 


LAA 


^hz^^zJ 


<*jZ^.^j& 


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2££ 


1b£L 


Open  an  account  with  Merchandise  on  the  upper  half  of  page  3  in  your  ledger,  and 
index  the  account  as  previously  instructed.  Now,  post  the  cash  entry  to  the  debit  side  of  the 
Merchandise  account,  making  the  proper  folio,  initial,  and  date  entries  in  cash  book  and 
ledger  as  heretofore.  After  this  posting,  your  Merchandise  account  should  appear  (with 
the  exception  of  the  date)  like  the  accompanying  form. 

File  the  Invoice  as  previously  instructed. 

THE  FOURTH  TITLE  IN  THE  LEDGER— WITH  FIRST  ENTRY 


Z^L^±^^^^2^^=^^ 


'-*S 


7.  Pay  cash  for  an  invoice  of  blanks  and  stationery  for  office  use,  $32.50,  taking  a 
receipted  bill. 

Office  Course.    Carry  out  this  transaction  at  Tablet  Course.    Take  your  receipted  bill  from 

the  Commercial  Exchange.  the  Commercial  Exchange  pad  and  deliver  the  cur- 

rency as  usual. 

Notice  this  distinction  between  what  is  charged  to  Expense  and  what  is  charged  to 
Furniture  and  Fixtures  :  the  latter  account  is  for  an  article  or  fixture  that  can  be  sold  again 
when  we  go  out  of  business  or  buy  new  fixtures,  whereas  the  Expense  account  is  for  things 
that  are  regularly  consumed  in  carrying  on  the  business  and  on  which  we  realize  value  only 
as  they  are  used.    To  which  account  should  the  last  purchase  be  charged  ? 

After  making  the  necessary  entries  for  this  transaction,  number  and  file  the  invoices  as 
previously  instructed. 

8.  Sell  the  following  merchandise  to  C.  W.  Hammond  &  Co.  for  cash : 


10  gal.  Sunlight  Syrup 
10  cs.  Coe's  Wh.  Flakes 
5  bx.  Joy's  Soda  Crackers 
5  bx.  Cal.  Sil.  Prunes 


.60  per  gal. 
2.40  per  cs. 

.80  per  box. 
2.00  per  box. 


Make  a  bill  of  these  goods  on  one  of  the  blank  bill  heads  in  your  equipment,  taking  the 
invoice,  or  bill,  received  from  Dalton  &  White  as  a  model.  Enter  the  number  of  the  transac- 
tion (8)  in  the  upper  left  corner  of  the  bill  for  convenience  in  verifying  the  amount.   As  soon 


SET  ONE— JOBBING  GROCERY  BUSINESS 


56 


as  the  bill  has  been  approved  by  your  teacher,  remove  the  required  cards  or  coupons  from 
your  merchandise  slips  and  deliver  them  with  your  receipted  bill,  collecting  cash  for  the 
amount  of  the  sale.  All  cash  received  or  paid  out  should  be  carefully  counted  by  the  student. 
In  making  these  and  subsequent  sales,  be  very  careful  to  deliver  the  right  kind  and  num- 
ber of  merchandise  cards.  If  any  error  is  made  in  delivering  the  merchandise,  it  will  affect 
some  of  the  sales  to  be  made  later  on,  and  cause  you  delay  and  annoyance.  Take  enough  time 
to  be  accurate. 


Office  Course.  The  student  will  deliver  the 
invoice  and  merchandise  cards  at  the  Commercial 
Exchange,  receiving  the  cash. 


Tablet  Course.  The  bill  should  be  folded  so 
as  to  enclose  the  merchandise  cards  and  should  be 
placed  in  "Outgoing  Papers."  The  cash  for  this  in- 
voice should  be  taken  from  Community  Cash. 

In  these  early  transactions  we  want  the  student  to  learn  that  for  every  debit  in  the  cash 
book  there  is  a  credit  in  some  ledger  account,  and  likewise  for  every  credit  in  the  cash  book 
there  is  a  debit  in  some  ledger  account. 

For  every  cash  sale,  Cash  is  debited  because  this  title  receives  the  value,  and  Merchan- 
dise is  credited  because  it  produces  the  value. 

At  a  later  date  we  will  use  the  sale  book  and  post  the  total  sales  for  a  given  period, 
but  until  the  debit  and  credit  principle  is  fully  mastered,  each  sale  will  be  posted  from  the 
cash  book  to  the  credit  of  Merchandise. 

Record  your  sale  to  Hammond  &  Co.,  as  in  the  second  entry  below. 

FIRST  TWO  DEBIT  ENTRIES  IN  CASH  BOOK,  FIRST  ONE  HAVING  BEEN  POSTED 


(Z^^Ay 


■£?7t£*J J^kJZ*/  h^-z^-e^Z^-, 


Zs-Ttf  /7 


-~zr*= 


Jl 


sb^^/^ 


^^a^ey(3^hfl^a^>T^^^^ 


{A 


Post  this  entry    to   the   credit  of  Merchandise  account  on  page  3  of  the  ledger,  writing 
the  page  numbers  in  the  folio  columns  as  usual. 


9. 


Sell  the  following  merchandise  to  R.  M.  Gray  for  cash : 

10  gal.  Sunlight  Syrup  @       .60  per  gal. 

5  bx.  Joy's  Soda  Crackers         @       .80  per  box. 
Make  a  bill  as  in  Transaction  8,  have  it  verified,  deliver  the  invoice  and  merchandise,  re- 
ceive the  cash  and  enter  the  same  in  cash  book.     Post  to  the  credit  of  Merchandise,  the  same 
as  in  preceding  transaction. 

The  Cash  Proof.  No  detail  of  accounting  is  more  important  than  the  daily  verifying, 
or  "proving"  of  the  cash  account.  This  is  effected  simply  by  counting  the  cash  on  hand  to 
see  if  the  amount  is  the  same  as  the  "balance,"  or  difference  between  the  totals  of  the  two 
sides  of  the  cash  book.  In  many  business  houses,  however,  a  written  form  of  cash  proof  is 
used,  which  shows  the  work  of  the  proof  in  detail.  Such  cash  proofs  are  to  be  used  hereafter 
in  your  work,  and  will  be  called  for  from  time  to  time.  Included  in  your  outfit  is  a  pad  of 
forms  to  be  used  for  this  purpose.  The  form  on  page  56,  except  name  and  date,  shows  your 
cash  proof  as  it  would  appear  if  made  out  at  the  end  of  Transaction  9. 

EXPLANATIONS  OF  CASH  PROOF 

On  the  line  for  "Previous  Cash  Balance,"  we  enter  the  amount  of  the  investment,  $2500. 
In  subsequent  reports,  this  line  will  show  the  cash  balance  as  shown  by  the  previous  report. 

On  the  line  for  "Cash  Received,"  we  enter  the  total  of  the  items  in  the  first  column  of 
the  debit  side  of  the  cash  book,  $54. 

On  the  line  for  "Cash  Paid,"  the  total  cash  book  credits  is  entered,  $592.25. 


56 


NEW  INDUCTIVE  BOOKKEEPING 


THE  LEFT  FOLIO  OF  THE  CASH  BOOK  AFTER  BALANCING 


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The  "Cash  Balance,"  $1961.75,  is,  of  course,  the  difference  between  the  two  previous 
entries. 

The  next  line  shows  the  amount  on  hand  in  the  cash  drawer.  If  there  has  been  no  error 
either  in  handling  the  money  or  in  keeping  the  cash  book,  this  amount  will,  of  course,  agree 
with  the  cash  balance,  provided  none  of  your  cash  is  in  the  bank.  As  you  have  had  no  deal- 
ings with  the  bank,  the  next  line  would  be  blan,k  in  your  present  report. 


CASH  PROOF. 

Name- 

Date_         -J&z^^ 'of  / f  ~  ,  . 

Previous  Cash  Balance.... %~?^~2   #  '  #, 

Cash  Received • 

Total  Debit  of  Cash -$:Zi£_^_^L- 

Cash  Paid..... - ^T<?  2.3^T 

Cash  Balance /  f&    / <^  ^ 

Cash  on  hand  per  Cash  Drawer %/  f  &    ^'7 

Cash  in  bank  per  Check  Book , J^ 

Total  Equal  to  Cash  Balance.. , V  V  0  /.  ?• 


Before  making  out  the  cash  report,  an  informal  test  of  the  cash  should  be  made.  To  do 
this,  using  a  sharp-pointed  pencil,  enter  in  small  figures  the  totals  of  the  two  sides  of  the  cash 
book  as  shown  in  the  form  above  and  on  page  57.  On  a  piece  of  waste  paper,  subtract  the 
total  credits  from  the  total  debits,  and  then  see  if  the  difference  agrees  with  the  cash  on  hand 
and  in  bank.  If  this  is  found  to  be  the  case,  the  cash  proof  may  then  be  prepared.  When  ap- 
proved by  your  teacher,  it  should  be  filed  in  Letters  and  Documents.  As  your  present  cash 
proof  has  been  made  out  for  you  for  the  purpose  of  illustration,  it  will  not  be  necessary  for 
you  to  make  out  another  one  at  this  time. 


SET  ONE— JOBBING  GROCERY  BUSINESS 


57 


THE  RIGHT  FOLIO  OF  THE  CASH  BOOK  AFTER  BALANCING 


£*^/S 


^ 


Balancing  the  Cash  Book.  An  account  is  said  to  be  "balanced"  when  the  footings  of 
the  two  sides  are  equal,  and  when  the  footings  have  been  entered  (in  ink)  and  the  account 
ruled  up  in  proper  form.  The  accompanying  form  illustrates  the  correct  method  of  balancing 
the  cash  book.  The  "balance,"  or  difference  between  the  two  sides,  is  entered  in  red  ink  on 
the  credit  side,  after  which  the  proper  footings  and  rulings  are  made.  The  account  is  con- 
tinued by  transferring,  or  "bringing  down"  the  balance  to  the  debit  side  and  entering  it  in 
black  ink  below  the  rulings.  Study  the  accompanying  form  and  then  balance  and  rule  up 
your  own  cash  book,  and  continue  it  by  transterring  the  balance  to  the  debit  side  as  in  the 
model  form.  Before  attempting  the  rulings,  it  would  be  well  to  make  a  few  practice  rulings 
on  a  sheet  of  journal  paper.  Be  careful  to  make  all  rulings  required  and  in  the  proper 
position. 

Look  over  the  work  you  have  done  and  see  where  you  can  improve  in  neatness.  Remem- 
ber that  your  salary  as  a  bookkeeper  or  your  efficiency  in  any  business  position  will  depend 
largely  on  two  things,  neatness  and  accuracy. 

Be  sure  to  understand  your  work.  If  any  process  is  not  perfectly  clear  to  you,  let  the 
teacher  explain  it.  It  is  assumed  that  you  will  understand  each  step  in  the  work  before  you 
leave  it  for  the  next.  The  whole  work  is  built  on  this  progressive  plan,  and  your  failure  to 
understand  one  point  leaves  you  deficient  in  other  points  based  on  the  first. 

10.  Order  from  the  Fenton  Produce  Co.  the  following  goods,  to  be  paid  for  in  cash 
when  delivered : 

25  bx.  Oakdale  Butter 
50  cs.  Eggs 
80  bu.  Wh.  Beans 
20  brl.  Onions 


Proceed  as  directed  under  Transaction  6. 
11.     Sell  Hall  &  Dayton  for  cash : 

10  cs.  Dixon  Peaches 
5  bx.  Toy's  Soda  Crackers 
5  bx.  Oakdale  Butter,  250  lbs 

10  cs.  E?gs,  300  doz. 
2  brl.  Onions 


This  invoice  is  No.  5. 


@  $2.70  per  case. 

@       .80  per  box. 

@       .18  per  lb. 

@       .16.  per  doz. 

@     3.60  per  brl. 

Proceed  as  in  Transaction  8,  entering  in  the  cash  book,  first  column,  and  posting  to  the 
credit  of  Merchandise  in  the  ledger. 


58  NEW  INDUCTIVE  BOOKKEEPING 

12.  Sell  to  C.  H.  Nelson  &  Sons,  the  following  merchandise  for  cash,  proceeding  as  in 
previous  transactions : 

10  bu.  White  Beans  @  $1.75  per  bn. 

5  bx.  Oakdale  Butter,  250  lbs.  @  .20  per  lb. 

20  gal.  Sunlight  Syrup  @  .55  per  gal. 

15  bx.  Joy's  Crackers  @  .80  per  box. 

13.  Write  a  brief  advertising  announcement  for  the  "Daily  News,"  stating  that  you  have 
on  hand  a  fine  lot  of  choice  butter  and  eggs  which  you  will  sell  to  retailers  at  lowest  market 
rates.  Take  this  advertisement  to  your  teacher  for  approval,  after  which  hand  it  to  the  above 
firm  in  the  manner  named  below  with  cash  $3.50  to  pay  for  insertion  for  one  week. 

Office    Course.    Deliver    to    the    Commercial  Tablet  Course.    Deliver     the     "ad"     through 

Exchange  with  the  cash  and  take  their  receipt.  "Outgoing  Papers,"  pay  the  currency  as  usual,  and 

take  your  receipt  from  the  Commercial  Exchange 
pad. 

File  the  receipt  in  "Receipts  and  Vouchers,"  as  usual. 

14.  Order  from  the  Western  Milling  Co.,  the  following  goods  to  be  paid  for  in  cash 
when  delivered : 

50  brl.  Daisy  Flour  25  brl.  A.  A.  Rye  Flour 

20  brl.  Acme  Rolled  Oats  100  sk.  Graham  Flour 

Carry  out  the  transaction,  verify,  number  and  file  the  invoice  and  separate  the  merchan- 
dise slips,  make  the  entries,  and  post  as  instructed  in  Transaction  6. 

15.  Sell  the  following  goods  to  Wilson  &  Blair  for  cash,  proceeding  as  in  previous 
sales : 

10  cs.  Coe's  Wh.  Flakes  @  $2.50      per  case.    • 

20  cs.  Dixon  Peaches  @     2.75      per  case. 

10  cs.  Eggs,  300  doz.  @       .17^2  per  doz. 

5  bx.  Oakdale  Butter,  250  lbs.  @       .19      per  lb. 

Be  careful  to  make  out  each  bill  correctly  and  deliver  the  right  goods.  If  any  error  is 
made  in  delivering  merchandise,  it  will  make  trouble  later  on. 

16.  Sell  to  D.  S.  Manning  for  cash  all  goods  of  Invoice  No.  3  remaining  on  hand  at 
the  following  prices. 

20  cs.  Dixon  Peaches  @  $2.70  per  case. 

20  bx.  Cal.  Sil.  Prunes  @  2.00  per  box. 

60  gal.  Sunlight  Syrup  @  .60  per  gal. 

10  bx.  Joy's  Soda  Crackers  (a)  .85  per  box. 

30  cs.  Coe's  Wh.  Flakes  @  2.50  per  case. 

17.  Pay  cash  to  the  Carter  Coal  Co.  for  coal  for  heating  your  store  room,  $8.50,  tak- 
ing a  receipt. 

Carry  out  this  transaction  in  the  usual  manner.  Dispose  of  the  receipt  and  make  entries  as  in 
previous  expense  transactions. 

18.  Sell  to  Rockwell  &  Stone  for  cash,  the  following  goods : 

5  bx.  Oakdale  Butter,  250  lb.  @  $  .20  per  lb. 

10  cs.  Eggs  @       .18  per  doz. 

30  bu.  Wh.  Beans  @     1.75  per  bu. 

19.  Sell  to  Larson  &  French  for  cash : 

20  brl.  Daisy  Flour  (a)  $4.25  per  brl. 

13  brl.  R.  Oats  @     6.25  per  brl. 

10  brl.  A.  A.  Rye  Flour  @     3.70  per  brl. 

20.  Sell  to  Geo.  A.  Benson  for  cash,  all  the  remaining  goods  of  Invoice  5,  at  the  follow- 
ing prices : 

5  bx.  Oakdale  Butter  (a)  $  .20  per  lb. 

20  cs.  Eggs  (a)       .17^  per  doz. 

40  bu.  Wh.  Beans  @>     1.75  per  bu. 

18  brl.  Onions  @     3.60  per  brl. 


SET  ONE— JOBBING  GROCERY  BUSINESS  59 

21.  Sell  to  A.  P.  Sheldon  &  Co.  for  cash,  the  following  goods  of  Invoice  6,  charging 
them  an  advance  of  fifty  cents  per  barrel  over  cost  for  the  "Daisy"  and  rye  flour  and  rolled 
oats,  and  an  advance  of  fifteen  cents  per  sack  for  the  Graham  flour : 

30  brl.  Daisy  Flour  7  brl.  Rolled  Oats 

15  brl.  Rye  Flour  100  sk.  Graham  Flour 

You  can  find  the  cost  of  the  flour  and  rolled  oats  by  referring  to  the  invoice. 

Make  an  informal  test  of  your  cash  as  instructed  on  page  56,  after  which  prepare  a  cash 
proof  as  instructed  under  Transaction  9.  Pencil  on  the  proof  "Trans.  21"  to  enable  your 
teacher  to  identify  it. 

When  your  cash  proof  is  approved  by  your  teacher,  balance  your  cash  book  as  instructed 
on  page  57,  using  the  entries  on  your  cash  proof  as  data  for  the  closing. 

Correcting  Errors.  If  an  error  has  been  made  in  an  entry  that  may  be  corrected  with- 
out re-writing  the  whole  entry,  neatly  cross  out  the  word  or  amount  that  is  incorrect  and 
write  the  correct  word  or  amount  in  red  ink  just  above  the  incorrect  one. 

If  the  error  is  of  such  a  nature  that  the  whole  entry  should  be  re-written,  write  the  word 
"Void"  in  red  ink  at  the  point  in  the  book  where  the  folio  figure  would  be  written,  then  re- 
write the  entire  entry  in  black  ink.  Do  not,  under  any  circumstances,  erase  entries  or  so  cor- 
rect them  that  the  original  figures  are  illegible.  Large  sums  of  money  have  been  lost  through 
court  decisions  based  on  erased  or  obliterated  entries.  In  such  a  case,  there  is  no  means  of 
knowing  why  the  erasures  were  made,  and  a  judge  will  usually  rule  that  such  a  set  of  books 
cannot  be  received  as  evidence. 

Checking  the  Ledger.  Careful  bookkeepers  test  the  accuracy  of  their  posting  by  check- 
ing the  ledger,  and  the  student  should  test  his  work  in  this  manner  before  every  trial  balance. 
We  can  best  describe  the  process  by  directing  the  student  in  checking  his  ledger  entries.  First 
sharpen  your  pencil  to  a  fine  point.  Turn  to  the  debit  side  of  your  cash  book  and  see  if  the 
$2,500  is  posted  to  your  credit  in  the  ledger.  If  this  entry  is  correct,  make  a  light  pencil 
check  (V)  on  the  double  red  line  to  the  left  of  the  amount  (2500)  in  the  ledger,  and  a  sim- 
ilar check  mark  in  the  cash  book.  We  are  sure  of  a  debit  for  a  credit  thus  far.  The  next 
entry  (44)  should  be  checked  in  the  credit  side  of  Merchandise  and  also  in  the  cash  book. 
In  the  same  manner,  the  other  entries  in  the  debit  page  of  the  cash  book  should  be  traced  to 
the  ledger,  and  if  correct,  the  amounts  should  be  checked  in  each  book. 

The  credit  side  of  the  cash  book  should  next  be  compared  with  corresponding  debits  in 
the  ledger,  and  all  correct  amounts  should  be  checked  in  both  books.  If  the  page  numbers 
have  been  correctly  written  in  the  folio  column,  it  will  be  an  easy  matter  to  turn  from  the 
cash  book  to  any  required  ledger  entry. 

After  all  corresponding  entries  in  the  two  books  have  been  checked,  the  student  should 
look  carefully  through  the  amounts  to  see  if  any  entry  remains  unchecked.  Such  an  entry 
is  likely  to  be  an  error  and  the  same  should  be  carefully  considered.  If  an  error  is  found, 
correct  it  as  previously  instructed — Remember:     Do  not  erase! 

The  Trial  Balance.  It  has  already  been  shown  (page  10)  that  if  the  books  have  been 
cdrrectly  kept,  the  total  debits  of  the  ledger  will  equal  the  total  credits.  From  this  it  is  evi- 
dent that  the  excess  of  debits  (that  is,  the  sum  of  all  the  debit  balances)  must  equal  the 
excess  of  credits,  or  the  sum  of  all  the  credit  balances.  A  trial  balance  can  therefore  be  made 
by  means  of  the  balances  of  the  several  accounts  instead  of  the  totals.  This  form  of  trial 
balance  is  generally  preferred,  by  bookkeepers,  and  is  the  form  that  will  hereafter  be  used  in 
this  book.  A  trial  balance  composed  of  totals  is  properly  called  a  "Proof  Sheet,"  since  its 
purpose  is  to  afford  "proof"  that  the  ledger  is  in  balance. 

You  may  now  prepare  a  trial  balance,  as  in  the  form  on  page  61,  except  that  you  are  to 
use  your  own  name  for  the  proprietor's  investment  account  instead  of  T.  M.  Carpenter. 

After  the  first  account  title,  "Cash,"  we  write  the  amount  of  the  present  cash  balance, 
$2,511.50.  As  there  is  but  one  entry  on  each  of  the  next  three  ledger  accounts,  these  entries 
are  "balances,"  and  are  accordingly  entered  on  the  trial  balance.     The  present  total  of  the 


60 


NEW  INDUCTIVE  BOOKKEEPING 


debits  of  the  Merchandise  Account  is  $1,308.50,  and  the  credit  total  is  $1,634.50.  The  credit 
balance  of  this  account  is  therefore  $326,  which  amount  is  entered  in  the  credit  column  of  the 
trial  balance. 

The  two  columns  of  the  trial  balance  are  now  added  and  as  the  total,  $2,826,  is  the  same 
for  both  columns,  the  books  are  assumed  to  be  "in  balance."  ( See  First  Trial  Balance, , 
page  61.) 

Hand  your  blank  books,  including  the  trial  balance,  to  the  teacher  for  inspection,  then 
study  the  following  instructions  as  to  Bank  Deposits  and  'Bank  Checks. 

BANK  DEPOSITS 

It  is  customary  for  business  men  to  keep  their  money  "on  deposit"  in  banks,  and  to  draw 
out  or  pay  out  this  money  when  required,  by  means  of  orders  on  the  bank,  called  Checks. 

A  Deposit  is  a  sum  of  money  or  other  funds,  placed  in  a  bank  and  subject  to  check  by  the 
depositor. 

A  Bank  Balance  is  the  amount  of  money  due  the  depositor,  and  it  is  equal  to  the  sum  of 

all  his  deposits1",  less  the  sum  of  all  his  checks. 

x.r.T.^o^^^.o  „™TA™TT^  FORM  OF  SIGNATURE  CARD 

DEPOSITOR'S  SIGNATURE 

The  person  opening  a  bank  ac- 
count is  required  to  leave  his  signa- 
ture at  the  bank  in  the  exact  form 
that  he  will  use  it  in  signing  checks, 
notes  and  other  commercial  papers. 
This  signature  may  be  recorded  in  a 
signature  book  kept  by  the  bank,  or 
it  may  be  written  on  a  card  giving 
the  same  information. 

The  card  is  more  convenient  and 
is  rapidly  coming  into  use  in  place 
of  the  signature  book.  If  the  de- 
positor is  introduced  to  the  banker 
by  another  person,  the  name  of  the 
latter  is  also  recorded  on  the  card. 


NAME   OF  CORPORATION,  FIRM   OR  INDIVIDUAL, 


For  the  EXCHANGE  BANK,  Clinton,  Iowa 


Signatures  and  by  whom  made 


Address        /  g '^^^L^rLV  aZ/^-/ 


Date     U72^l^y. 


/°.  '<? 


MAKING  A  DEPOSIT 

The  depositor 
lists  the  funds  to  be 
deposited  on  a  form 
called  a  deposit  tick- 
et ( sometimes,  also 
called  a  deposit  slip) 
and  passes  this  tick- 
et, with  the  funds  to 

be     deposited,   tO     the    Currency—. 

proper    bank    officer  coin 

(usually  the  Receiv-  other  items 
ing  Teller),  who 
counts  the  money 
and  the  checks,  if 
any,  to  see  that  the 
amount  agrees  with 
the  amount  given  on 
the  deposit  ticket.    If 


Introduced  by  tf^Cty  /O^-a^em^ 


Form  of  Deposit  Ticket,  Currency 
Only. 

EXCHANGE  BANK. 


Form  of  Deposit  Ticket,  Checks 
and  Currency. 

EXCHANGE  BANK. 


DEPOSITED  BY 


-^  DgPpSJTED  BY 


U»l  Weeks  and  Drafts... 


/  o  o  o 


/  o  o  o 


SET  ONE— JOBBING  GROCERY  BUSINESS 


61 


it  is  found  to  be  correct,  the  bank  clerk  enters  the  amount  of  the  deposit  in  the  depositor's 
pass  book,  as  shown  in  the  accompanying  form. 

If  there  are  several  checks  to  be  deposited,  the  amounts  of  these  papers  are  entered  in 
the  first  set  of  columns,  and  their  total  is  extended  to  the  last  set  of  columns,  as  illustrated  in 
the  second  form  of  deposit  ticket  on  page  60. 


FIRST  TRIAL  BALANCE 


JL 


C-^^^A^y 


^^^£& <4^-4-^L4^<^fe^y 


j£^"// 


J~a> 


f£ 


^k 


&££_£ 


Z. 


c^L^^^i^^^^^^^-4^^ 


J- 


-^^s^^f  y  ^ 


2Zf 


2  fJ>  / 


c?^ 


2f2£ 


The  Pass  Book.  This  book  (often  called  a  "bank  book")  is  a  small  blank  book  kept 
by  the  depositor  in  which  an  officer  of  the  bank  keeps  the  depositor's  account,  by  entering 
the  amount  of  the  deposits  and  checks. 

The  deposits  are  entered  on  the  debit  side  of  the  book  at  the  time  they  are  made,  while 
the  amount  of  the  checks  is  entered  when  the  book  is  "balanced."  This  is  usually  done 
monthly.  This  method  is  still  followed  by  savings  banks  and  many  of  the  smaller  commer- 
cial banks,  but  of  late  the  more  important  commercial  banks  enter  the  deposits  only  in  the 
pass  book,  and  send  a  special  monthly  statement  to  each  depositor,  accompanied  by  his 
checks  that  the  bank  has  paid  since  the  previous  statement  was  rendered.  (See  "Depositor's 
Statement,"  page  76.)     In  your  present  course,  the  latter  method  will  be  followed. 


FORM  OF  PASS  BOOK 


Dr. 


EXCHANGE  BANK, 


la  Acc't        With.. 


£&>^^ 


<f 


/o 


/^jb^^t^— 


/  ood 


First  Deposit.     The  student  may  now  deposit  cash  in  bank,  $2400. 

You  will  find  in  your  outfit  a  pad  of  deposit  tickets.  Fill  out  one  of  these  tickets,  as  in  the 
first  form  on  page  60,  but  using  your  own  name  and  place  of  business,  and  the  amount, 
$2400.  Next,  take  the  amount  of  your  deposit  from  your  cash  envelope.  Assort  the  bills, 
that  is,  arrange  them  so  that  bills  of  the  same  denomination  will  be  together,  those  of  higher 
denomination  at  the  top  of  the  package.  The  bills  should  be  face  upward  and  in  right  posi- 
tion for  reading.  Busy  bank  clerks  in  large  cities  will  not  receive  deposits  unless  the  bills  are 
properly  arranged. 


Office  Course.  Take  your  deposit  tickets  and 
currency  to  your  bank,  and  receive  credit  on  your 
pass  book  for  the  amount  deposited.  While  at  bank, 
fill  out  a  signature  card  for  the  banker  to  file  away. 


Tablet  Course.  Fill  out  a  signature  card  and 
leave  it  with  your  deposit  tickets  and  currency  in 
your  Bank  envelope,  entering  the  amount  of  the  de- 
posit in  your  pass  book  as  the  banker  would  enter  it. 


62  NEW  INDUCTIVE  BOOKKEEPING 

BANK  CHECKS 

A  Bank  Check  is  a  written  order,  by  means  of  which  a  depositor  authorizes  the  bank  to 
pay  out  money  to  the  person  named  in  the  check.     See  form  below. 

Checks  may  be  written  payable  to  order  or  payable  to  bearer.  It  is  better  to  make  them 
payable  to  the  order  of  the  party  we  wish  to  pay,  so  that  he  may  be  required  to  endorse  his 
name  on  the  back  of  the  check  when  the  bank  pays  him.  The  paid  checks  are,  at  a  later 
date,  returned  by  the  bank  to  the  party  who  issued  them,  and  he  can  then  file  them  away  as 
receipts  showing  that  he  made  the  payments. 

Parties  to  a  Check.  The  person  who  issues  the  check  is  known  as  the  "drawer."  The 
bank  upon  which  the  check  is  drawn  is  known  as  the  "drawee"  or  "payer,"  and  the  person 
in  whose  favor  the  check  is  drawn  is  called  the  "payee." 

The  Check  Book.  The  check  blanks  are  usually  bound  in  books,  each  check  having  a 
blank  on  the  left  margin,  called  the  "stub,"  in  which  a  record  is  kept  of  all  facts  pertaining 
to  the  check  issued. 

The  Check  Stub.  The  check  stub  enables  the  drawer  of  a  check  to  record  the  date  and 
number  of  the  check,  to  whom  given,  for  what  amount,  and  for  what  purpose. 

FORM  OF  BANK  CHECK  WITH  STUB  ENTRY 


^  ^y^,  ^  ^SA^A.  s/,9  .     ^JW 


Js^^^^ — 


Apply  to  your  teacher  for  the  books  submitted  for  inspection  when  your  trial  balance 
was  prepared.  If  the  books  are  approved,  copy  your  trial  balance  neatly  in  the  trial  balance 
section  of  your  ledger  binder. 

22.     Order  of  Dalton  &  White,  the  following  groceries,  to  be  paid  for  when  delivered : 
10  bgs.  Java  Coffee 
12  ch.  Japan  Tea 
20  bx.  Wisconsin  Cheese 
40  Cartons  Electric  Matches 
25  cs.  Ketchup 
Proceed  as  in  Transaction  6,  except  that  you  are  to  pay  for  this  invoice  with  your  check. 
Using  the  first  form  in  your  check  book,  make  out  a  check  in  favor  of  Dalton  &  White  (or 
of  the  firm  at  the  Wholesale  Office  of  whom  you  buy),  following  the  form  of  check  shown 
above,  except  that  you  are  to  use  the  current  date  and  your  own  signature.    Before  removing 
the  check  from  the  book,  make  all  necessary  entries  on  the  stub  and  forward  the  bank  balance 
to  the  next  stub. 

Now  remove  the  check  from  the  book  by  means  of  the  paper-cutter,  separating  the  check 
between  the  stub  and  face. 

Deliver  the  check  through  Outgoing  Papers,  if  in  the  tablet  course;  or  to  the  Wholesale 
Office,  if  in  the  office  course. 

The  Sales  Book.  As  a  large  proportion  of  the  transactions  of  an  ordinary  business 
are  likely  to  be  sales  of  merchandise,  it  saves  labor,  both  in  making  entries  and  in  posting, 
to  enter  all  sales  in  a  special  book,  called  a  Sales  Book.    All  sales  entered  in  the  sales  book 


SET  ONE— JOBBING  GROCERY  BUSINESS  63 

are,  of  course,  Merchandise  credits.  They  are  not  posted  to  the  Merchandise  account  sep- 
arately, however,  as  would  be  the  case  if  they  were  entered  in  the  cash  book  or  journal,  but 
they  are  totaled  in  the  sales  book  from  time  to  time,  and  passed  to  the  credit  of  Merchan- 
dise, in  a  single  amount. 

Each  entry  in  the  sales  book  consists  of  three  parts,  (1)  the  name  and  address  of  the 
customer,  (2)  the  items  purchased  with  prices,  extensions,  etc.,  (3)  the  terms  of  payment. 

In  case  of  cash  payments  on  a  sale,  in  full  or  in  part,  entries  are  required  in  both  cash 
book  and  sales  book. 

Posting  and  Closing  Sales  Book.  The  sales  book  represents  the  credit  side  of  the 
Merchandise  account,  and  such  items  as  are  to  be  posted  from  it  are  therefore  carried  to  the 
debit  side  of  the  accounts  affected.  The  accounts  to  which  the  items  are  to  be  posted  are 
shown  by  the  terms  of  sale  as  given  at  the  close  of  the  entry. 

Thus,  if  the  sale  is  on  account,  it  is  to  be  posted  to  the  purchaser's  account;  if  paid  for  in 
cash,  to  the  cash  book;  or  if  settled  with  the  purchaser's  note,  to  the  Bills  Receivable  account. 

In  case  a  part  payment  is  made  in  cash  and  the  balance  is  on  account,  the  whole  amount 
of  the  sale  is  posted  to  the  purchaser's  account,  while  the  payment  is  posted  to  his  credit 
from  the  cash  book.     The  amount  of  the  cash  payment  should  also  be  entered  on  the  bill. 

Check  off  in  the  sales  book  all  cash  sales  as  soon  as  they  are  entered  in  the  cash  book, 
to  indicate  that  they  are  to  be  passed  over  when  the  final  posting  of  the  sales  book  occurs. 
Check  off,  also,  such  items  as  are  carried  to  the  journal.  The  accompanying  forms  of  the 
sales  book  and  cash  book,  illustrate  the  manner  of  making  and  checking  off  entries. 

The  totals  of  the  sales  are  entered  at  the  foot  of  the  columns,  and  forwarded  until  such 
time  as  it  may  be  desirable  to  post  the  sales  to  the  Merchandise  account. 

When  the  sales  book  is  to  be  closed,  enter  the  total  and  post  it  to  the  credit  side  of  the 
Merchandise  account,  entering  in  the  explanation  column  of  this  account  the  letter  "S,"  and 
rule  up  the  sales  book. 

The  method  of  keeping  a  sales  book  and  of  carrying  entries  from  sales  book  to  cash  book 
are  illustrated  in  the  forms  on  pages  64  and  65,  the  entries  there  given  being  records  of  the 
following  transactions,  which  we  have  numbered  for  the  student's  convenience  in  referring 
from  the  transaction  to  the  record  of  the  same.  Study  these  model  transactions  and  entries 
carefully. 

TRANSACTIONS  FOR  THE  MODEL  ENTRIES 
NUMBER  1 

Jan.  2,  19—.  Sold  to  H.  Davis,  No.  14  Brook  Street,  13  brl.  Flour  @  $5,  10  bu. 
Potatoes  @  60c. 

(This  is  a  simple  sale  on  account,  the  item  being  posted  from  the  sales  book  to  the  debit 
of  Davis  in  the  ledger,  the  ledger  folio  being  entered  in  the  folio  column  of  the  sales  book, 
opposite  Mr.  Davis's  name.) 

NUMBER  2 

Jan.  3.  Sold  to  Geo.  Jones,  121  Main  Street,  for  cash,  5  cords  Maple  Stove  Wood  @ 
$2,  3  tons  Scranton  Coal  @  $6. 

(As  this  sale  is  paid  for,  we  enter  a  check  mark  opposite  Mr.  Jones's  name  in  the  sales 
book,  to  show  that  the  item  is  not  to  be  posted  to  his  account,  and  we  check  the  cash  item  in 
both  the  sales  book  and  cash  book,  to  show  that  no  entry  is  required  in  the  ledger.) 

NUMBER  3 

Jan.  5.  Sold  to  R.  Miller,  Stapleton,  N.  Y.,  25  bu.  Potatoes  @  50c,  12  brl.  Flour  @" 
$5.50,  receiving  cash,  $50,  balance  on  account. 

(Mr.  Miller  is  charged  with  the  entire  amount  of  the  purcln.se,  the  ledger  folio  "16" 
being  entered  opposite  his  name  when  the  item  is  posted.  The  cash  item  is  checked  in  the  sa1es 
book  when  carried  to  the  cash  book.  From  the  cash  book  it  is  posted  to  the  .credit  of  Mr. 
Miller's  account.  The  ledger  folios  would  not,  of  course,  be  entered  until  the  time  of  post- 
ing the  sales  book  and  cash  book.) 


64 


NEW  INDUCTIVE  BOOKKEEPING 


MODEL  ENTRIES  IN  SALES  BOOK 

*/fo- 

2- 

/3 

■ 

< 1 

S3^+£t.   tto^r                                                                   $f- 

£  £ 

/O  ^£-t^y.   rQi^ez-Z^-Cj                                                                             ,&,0 

6 

7  / 

CfC^X^.  SO  t^Ostf*) 

ty.2 

3- 

s 

^vU^r    Uo-7^C*d-S '/ 2-  /    "??7cx^^l. — <J*4 

/  0 

27 

s 

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fy.3 

/  2 

<s~o 

/zJ^f.^^c^-                                                                f.srv 

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SOO-/&*.  /ffa^r?^                                                                 .  /2 

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2-3  ¥ 

ZJrJ^J   Tt&^sr                                                    <Tkl 

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7 

/Yf&s  Oo" a^6^£is  ■$200.  ^&-a^.  aJo  —  .^-t^>■kfc-•^^'2-'*•t-«-<£" 

ty-7 

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i 

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S0 

NUMBER  4 


Jan.  6.  Sold  to  A.  L.  Baker,  17  Pine  Street,  on  his  note  at  60  days,  18  tons  L.  V.  Coal 
@$6. 

(As  this  sale  is  settled  by  note,  we  enter  a  check  mark  opposite  Mr.  Baker's  name,  indi- 
cating that  the  item  is  not  to  be  posted  to  his  account.  When  the  item  is  posted  to  Bills  Re- 
ceivable account,  the  folio  "24"  is  entered  in  the  sales  book.) 


SET  ONE— JOBBING  GROCERY  BUSINESS 


65 


MODEL  ENTRIES  IN  CASH  BOOK,  DEBIT  SIDE 


Wtzw. 


J 

V 

s 

/L 

7 

S 

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*S 

73^Jk. 


?7<r.2 
fy.3 


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SO 


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7 


3-0 


NUMBER  5 


Jan.  7.  Sold  to  C.  S.  Day,  29  Park  Avenue,  40  bu.  Potatoes  @  60c,  500  lb.  Bacon  @ 
12c,  30  brl.  Flour  @  $5,  receiving  cash  $100  and  his  note  at  30  days  for  balance. 

(As  this  sale  is  paid  for  by  cash  and  note,  no  entry  is  required  in  Mr.  Day's  account.) 

NUMBER  6 

Jan.  10.  Sold  to  A.  P.  Moore,  151  Clarke  Street,  42  bu.  Beans  @  $2.25,  25  brl.  Flour 
@  $5.60,  receiving  his  note  at  30  days  for  $200,  balance  on  account. 

(In  this  transaction  we  debit  Mr.  Moore  with  the  entire  amount  of  the  sale,  and  we 
credit  him  and  debit  Bills  Receivable  for  the  note  by  means  of  a  journal  entry.) 

JOURNAL  ENTRY  FOR  NOTE  APPLYING  ON  SALE 


Jan. 


10 


Bills  rec. 

A.  P.  Moore 


Reed,  note  at  30  days  from  A.  P. 
Moore  to  apply  on  sale  of  this 
date  per  Sales  Book 


200 


200 


NUMBER  7 

Jan.  12.     Petty  sales  to  this  date,  $147.50. 

(In  the  case  of  small  cash  sales  "over  the  counter,"  and  where  no  bills  are  rendered,  an 
itemized  entry  of  each  sale  is  not  made  in  the  :^les  book,  but  in  a  "petty  sales  book,"  or  by 
means  of  loose  slips  or  tickets.  The  total  of  these  petty  sales  is  entered  in  the  sales  book  at 
the  close  of  each  day  or  week. ) 

The  following  sale  is  to  be  entered  on  page  1  of  your  sales  book,  as  in  the  form  illus- 
trated on  page  66 : 

23.     Sell  to  C.  P.  Randall  &  Sons  for  cash : 


1  bg.  Java  Coffee 
1  bx.  Japan  Tea 
5  bx.  Wis.  Cheese 
5  cs.  Ketchup 


$  .23^  per  lb. 

.75  per  lb. 

.11^  per  lb. 

2.35  per  cs. 


You  will  receive  a  bank  check  in  payment  for  these  goods.  Place  this  check  in  your 
Cash  envelope.  (Checks  and  other  commercial  paper  payable  on  presentation  are  considered 
in  business  as  cash.)  — 


Office  Course. 

mercial  Exchange. 


Receive  this  check  at  the  Corn- 


Tablet  Course.    Receive   this  check 
your  Commercial  Exchange  pad. 


through 


The  cash  received  from  the  above  sale  will  be  carried  to'  the  cash  book,  debit  side,  at 
once.  Hereafter  the  Merchandise  credits  will  be  posted  in  totals  from  the  sales  book  and  not 
in  items  from  the  cash  book.  To  indicate  that  these  entries  are  not  to  be  posted  from  the  cash 


66 


NEW  INDUCTIVE  BOOKKEEPING 


book,  a  check  mark  should  be  made  in  the  folio  column  opposite  the  cash  entry.  A  check 
mark  should  also  be  made  in  the  folio  column  of  the  sales  book  next  to  the  firm  name,  C.  P. 
Randall  &  Sons,  indicating  that  the  sale  will  not  require  posting  to  the  ledger.  The  form  of 
entry  in  the  cash  book  is  shown  below : 


FIRST  ENTRY  IN  SALES  BOOK 


^r 


/  ^£#.  o^t^^-iLy  <^^-^4-^j>^ 


.Jl*'/x 


■2  J jT^ 


/ \J^y 'fec^.     b^gL-^r^ 


vXV 


7*jT 


J~    .      .fe-V     6£l*^c^s  «^W: 


^?L^> 


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A^ 


^2 


/  0 


v- 


J^r 


-&c^^/  d^c^Ay 


CORRESPONDING  ENTRY  IN  THE  DEBIT  SIDE  OF  CASH  BOOK 


,iW  6 


^^^zZ^^L^^-z^^J     (^^^^^^^^t-^^yk^^-^^ 


/  0 


tZ 


Z^J- 


24.  Order  of  the  Harmer  Packing  Co.  (or  the  Wholesale  Office  firm)  the  following  in- 
voice of  cured  meats,  using  an  order  ticket  and  giving  your  check  for  the  amount: 

5  brl.  XX  Hams  200  cans  Leaf  Lard 

20  brl.  Mess  Pork  12  brl.  Bacon. 

Proceed  as  in  Transaction  22.     Forward  bank  balance  on  your  check  stub  as  instructed 
on  page  62. 

25.  Pay  $12.50  in  currency  for  janitor  service,  taking  receipt  for  same.   File  the  receipt 
and  make  the  usual  entries  for  expense  transactions. 

26.  Sell  to  A.  M.  Shaw  &  Co.  for  cash : 

@  $  .14J4  per  lb. 

@  9.50  per  brl. 

@  .12  per  lb. 

@  .25  per  lb. 

@  1.75  per  ctn. 


2  brl.  XX  Hams 

3  brl.  Mess  Pork 
50  cans  Leaf  Lard 

2  bg.  Java  Coffee 
5  cartons  El.  Matches 
You  will  receive  a  check  for  this  sale. 


Proceed  as  in  Transaction  23. 


27.  Order  the  following  invoice  of  produce,  using  an  order  ticket  and  giving  your  check 
in  payment : 

20  bx.  Oakdale  Butter  30  bx.  California  Lemons 

40  cs.  Eggs  20  brl.  Onions 

250  bu.  Potatoes 
Follow    instructions    given  in  Transaction  24,  ordering    of    the    Fenton  Produce  Co., 
unless  the  teacher  designates  another  firm. 

28.  Sell  to  C.  W.  Hammond  &  Co.  for  cash : 

5  bx.  Oakdale  Butter 
5  cs.  Eggs 
50  bu.  Potatoes 
2  brl.  Onions 
You  will  receive  currency  for  this  sale. 


$  .18^  per  lb. 

.15  per  doz. 

.60  per  bu. 

3.70  per  brl. 


SET  ONE— JOBBING  GROCERY  BUSINESS 


67 


29.  Make  a  cash  proof,  proceeding  as  in  Transactions  9  and  21. 

As  the  bank  account  has  been  introduced  since  the  last  cash  proof,  the  student  should  remember 
that  the  cash  in  drawer  added  to  the  balance  in  bank  should  equal  the  cash  book  balance. 

The  cash  proof  should  be  filed  with  "Letters  and  Documents,"  as  it  may  be  called  for  at  a  later  date. 
If  your  cash  does  not  "prove,"  always  report  the  fact  to  your  teacher. 

30.  You  may  now  deposit  in  bank  the  fwo  checks  on  hand  (received  in  Transactions 
23  and  26)  and  $50  in  currency. 

Indorsing  Checks.     Indorse  the  two  checks,  before  depositing,  by  writing  your  name 
on  the  back  of  each.    The  indorsement  should  be  written  across  the  left  end  of  the  paper. 

A  CHECK  INDORSED 


'**^&  .-^jy&x^z. 


^^^7      $#4- 


IS  COLLEQE  CURRENCY. 


When  checks  or  other  commercial  papers  are  presented  at  the  bank,  either  for  payment 
or  deposit,  they  should  be  endorsed  by  the  payee;  this  is  required  by  banks.  Hereafter,  in 
your  work,  indorse  all  checks  that  you  deposit,  also  those  that  you  present  to  the  bank  for 
payment. 

The  chief  purpose  of  an  indorsement  is  to  afford  evidence  that  the  check  or  other  in- 
dorsed paper  has  been  paid  to  the  right  person.  The  indorsement  by  the  payee  is  equivalent  to 
his  receipt  for  the  payment,  if  made.  It  also  makes  the  indorser  responsible  for  the  payment 
and  genuineness  of  the  paper,  to  any  person  to  whom  it  may  be  given  in  the  course  of  busi- 
ness. 

In  preparing  your  deposit  ticket,  follow  the  second  form  on  page  60.  Itemizing  the 
checks  in  the  deposit  entry  on  your  check  stub,  will  often  be  of  great  value  for  after 
reference. 

31.     Sell  to  Campbell  &  Crane,  No.  16  River  St.,  on  account,  the  following  goods: 

2  bg.  Java  Coffee  @  $  .24  per  lb. 
5  bx.  Japan  Tea  @  .80  per  lb. 
5  brl.  Mess  Pork                             (a)     9.40  per  brl. 

3  brl.  Br.  Bacon  @       .14  per  lb. 

Enter  this  transaction  in  the  sales  book,  and  post  to  the  debit  of  account  with  Campbell 
&  Crane  as  illustrated  in  the  model  entries  on  page  68,  which  are  correct  except  in  the  date. 
Open  this  account  on  the  upper  half  of  page  6,  reserving  the  first  five  pages  for  general 
accounts. 


68 


NEW  INDUCTIVE  BOOKKEEPING 


ENTRY  IN  THE  SALES  BOOK  FOR  A  SALE  ON  ACCOUNT 


FIRST  LEDGER  DEBIT  POSTED  FROM  THE  SALES  BOOK 


4 

~s 

f 

M3J 

• 

^v_ 

■ 

32.     Sell  to  Hill,  McNair  &  Co.,  45  Eagle  St.,  on  account  at  five  days : 
1  brl.  XX  Hams  (5).  $  .15  per  lb. 

.13  per  lb. 


20  cans  L.  Lard 


3  brl.  Mess  Pork 
10  bx.  Lemons 
2  bx.  O.  Butter 


9.50  per  brl. 

2.90  per  box 

.20  per  lb. 


Proceed  as  in  previous  sale  on  account  to  Campbell  &  Crane,  opening  an  account  with  Hill,  McNair  & 
Co.  on  the  lower  half  of  page  6  of  your  ledger,  posting  the  sale  to  the  debit  of  this  account.  Do  not  omit 
to  enter  the  dates  correctly  and  the  proper  page  numbers  in  the  folio  columns  of  sales  book  and  ledger. 

The  accompanying  forms  illustrate  the  forwarding  entries  at  bottom  of  the  first  page  and  at  top  of 
the  second  page  of  the  sales  book,  the  amount  in  the  student's  book  being  different. 


FORWARDING  ENTRY  AT  BOTTOM  OF  FIRST  PAGE  OF  SALES  BOOK 


<£s/-/  J?Q 


FORWARDING  ENTRY  AT  THE  TOP  OF  SECOND  PAGE  OF  SALES  BOOK 


&  a-  / 


!7 


33.     Pay  to  the  City  Water  Works,  currency  $4.50,  for  water  tax,  per  bill  rendered. 


Office  Course.  Unless  otherwise  instructed, 
carry  out  this  and  future  transactions  at  the  Com- 
mercial Exchange. 


Tablet  Course.     You  will  find  this  bill  in  the 
Commercial  Exchange  pad. 


SET  ONE—JOBBING  GROCERY  BUSINESS  69 


Hereafter,  special  instructions  as  to  entries  and  the  carrying  out  of  transactions  will  not 
be  given  in  the  case  of  transactions  similar  to  those  you  have  already  had. 

34.     Order  of  the  Western  Milling  Co.  (or  the  Wholesale  Office  firm)  the  following  in- 
voice, asking  them  to  bill  the  goods  on  account: 
50  brl.  Daisy  Flour 
40  brl.  A.  A.  Rye  Flour 
100  sks.  Graham  Flour 
25  brl.  Acme  Rolled  Oats 

This  purchase  is  to  be  entered  in  the  journal,  Merchandise  being  debited  and  the  Western 
Milling  Co.  credited. 

See  third  entry  in  model  journal,  page  32.  Your  journal  entry  will  be  similar  in  form  except  that 
you  will  substitute  in  the  second  explanation  line  "Invoice  No.  10,"  instead  of  giving  the  items  in  the 
purchase. 

In  posting  the  journal  entry,  two  entries  will  be  made  in  the  ledger,  one  to  the  debit  of 
Merchandise,  on  page  3,  and  the  other  to  the  credit  of  the  Western  Milling  Co.,  a  new  title 
which  you  will  enter  in  the  ledger  on  page  7.  Do  not  forget  the  ledger  pages  in  the  folio 
column  of  the  journal,  and  the  journal  page  (1)  in  the  folio  columns  of  the  ledger  accounts. 
Enter  in  the  explanation  column  of  the  ledger  the  initial  "J,"  to  show  that  the  item  has  been 
posted  from  the  journal. 

Receipts.  A  receipt  is  a  written  acknowledgment  that  the  maker  has  received  into  his 
possession,  money  or  other  property  from  the  person  to  whom  the  receipt  is  given. 

A  receipt  should  always  be  required  when  money  is  paid  on  account,  and  the  receipt 
should  state  clearly  the  purpose  of  the  payment.  Receipts  should  be  carefully  filed  and  never 
destroyed  until  there  is  no  longer  any  possibility  that  they  may  be  wanted. 

FORM  OF  RECEIPT 


*fe^ 


EXPLANATION 


The  above  receipt  shows  that  Campbell  &  Crane,  being  indebted  to  T.  M.  Carpenter,  have 
paid  all  that  they  owe  to  Mr.  Carpenter  at  the  time  the  receipt  was  written,  and  that  Mr. 
Carpenter  acknowledges  this  payment.  The  form  shows  the  receipt  and  stub  as  they  would 
appear  before  the  receipt  is  removed  from  Mr.  Carpenter's  receipt  book. 

The  stub  of  a  receipt,  like  that  of  a  check,  is  to  afford  the  maker  all  the  necessary  data 
as  to  the  issue  of  the  receipt.  Always  fill  out  the  stub  before  removing  the  receipt  from  the 
book. 

35.  Receive  $421  in  currency  from  Campbell  &  Crane  for  the  amount  of  your  sale  to 
them  in  Transaction  31.  Fill  out  the  first  form  in  your  book  labeled  "Receipts."  Follow 
the  form  above,  except  as  to  date  and  signature. 

Office  Course.    Present    this    receipt    at    the  Tablet  Course.    Present   this   receipt  through 

Commercial  Exchange  and  collect  the  cash.  Outgoing   Papers    and    take   the   cash   from   Com- 

munity Cash. 

This  transaction  requires  a  debit  entry  in  the  cash  book.  The  cut  on  page  70  shows  the 
form  of  entry.     Post  this  entry  to  the  credit  of  Campbell  &  Crane's  account. 


70 


NEW  INDUCTIVE  BOOKKEEPING 


ENTRY  FOR  CASH  RECEIVED  ON  ACCOUNT 


Checking  Ledger  Entries.  In  the  case  of  some  personal  accounts,  the  payments  cor- 
respond to  the  amounts  of  the  charges.  In  such  accounts,  it  is  convenient  to  check  off  the 
amounts  and  payments  in  such  a  way  as  to  show  at  a  glance  what  bills  have  been  paid  in  full 
and  what  ones  have  not.  The  "X  mark"  (X)  is  conveniently  used  for  this  purpose.  When 
a  bill  is  paid,  the  credit  is  entered  and  both  amounts  checked  off.     (See  form  below.) 

As  the  present  payment  of  Campbell  &  Crane  is  in  full  of  their  purchase  in  Transaction 
31,  both  the  charge  and  the  payment  are  to  be  checked  or  "X-ed"  off. 

LEDGER  ACCOUNT  SHOWING  AMOUNTS  CHECKED  OFF 


36.     Sell  to  A.  N.  Spencer  for  his  check : 
5  bg.  Java  Coffee 
G  bx.  Japan  Tea 
15  bx.  Wis.  Cheese 
35  cartons  Elec.  Matches 
20  cs.  Ketchup 


@  $  .24  per  lb. 

@       .75  per  lb. 

@       12y2  per  lb. 

@  1.70  per  ctn. 

@  2.45  per  cs. 


After  making  sales  book  entry,  carry  the  amount  to  the  debit  side  of  the  cash  book,  mak- 
ing check  marks  in  cash  book  and  sales  book  as  instructed  under  Transaction  23. 


'37.     Sell  to  L.  P.  Moore  &  Co., 
1  brl.  XX  Hams 
4  brl.  Mess  Pork 
50  bu.  Potatoes 
20  brl.  Daisy  Flour 


125  E.  Main  St.,  on  account: 

@  $  12y2  per  lb. 

@     9.30  per  brl. 

@       .65  per  bu. 

@     4.40  per  brl. 


Open  an  account  with  L.  P.  Moore  &  Co.  on  page  7  of  the  ledger  and  post  their  debit,  making  the 
usual  postmark. 

38.  Give  your  check  to  the  Western  Milling  Co.,  or  the  firm  with  whom  you  dealt  in 
Transaction  34,  for  $200  to  apply  on  their  account. 

Since  this  check  will  serve  the  purpose  of  a  receipt  when  it  is  returned  to-  you  from  the  bank,  you 
do  not  need  a  receipt  from  the  above  firm.  They  will  have  indorsed  the  check  before  collecting  it  at  the 
bank  and  their  indorsement  will  serve  as  a  receipt. 

Although  a  receipt,  in  case  of  a  payment  by  check,  is  not  always  essential,  careful  busi- 
ness men  often  require  it  the  same  as  in  the  case  of  a  currency  payment. 

Make  a  c:  edit  entry  in  the  cash  book,  debiting  the  firm  to  whom  you  send  the  check. 

e::try  to  the  credit  of  cash,  debiting  western  milling  co. 


Q*?h  6 3h^&AsnJ%t<j&*^  &     ^y  ^ 


2j2JL 


SET  ONE— JOBBING  GROCERY  BUSINESS 


71 


As  this  check  does  not  pay  any  bill  in  full,  you  can  post  it  to  the  firm's  debit  without 
checking  off  any  entry  on  either  side. 

39.  Sell  to  Campbell  &  Crane,  No.  16  River  Street,  on  account : 

5  brl.  Rolled  Oats  @  $6.50  per  brl. 

40  sks.  Graham  Flour  @  .85  per  sk. 

3  brl.  Breakfast  Bacon  @  .14  per  lb. 

5  cs.  Eggs         t  @  .18  per  doz. 

40.  Receive  a  check  from  Hill,  McNair  &  Co.,  for  $75  to  apply  on  account. 
Proceed  as  in  Transaction  35. 

41.  Deposit  in  bank  $300  in  currency  and  all  checks  on  hand.  Enter  as  instructed  in 
Transaction  30,  adding  the  amount  of  the  deposit  to  your  previous  bank  balance  as  shown  on 
your  last  check  stub.  At  the  time  of  making  this  deposit,  request  the  bank  officer  to  rendei 
a  statement  of  your  account  to  date.     You  will  be  instructed  later  to  call  for  the  statement. 

42.  Rule  up  your  sales  book  and  post  the  total  to  the  credit  of  Merchandise,  making 
the  usual  postmarks  in  the  sales  book  opposite  the  total  line  and  in  the  ledger. 

The  form  below  illustrates  the  entry  for  the  total  sales,  which  should  be  posted  to  the 
credit  of  Merchandise  in  the  ledger. 

LAST  ENTRY  IN  THE  SALES  BOOK  BEFORE  POSTING  TO  MERCHANDISE 


JL 


^i^^^J^yyy^^<,^^ 


~,^U-^ 


-^CX^  ~^^ZZ*l^/  g^zzs      £j~a 


3  Z 


<fo 


o>     <£V 


CJ-^—^U^/        / \J~~a     "^-^jS 


■jLL 


2*7 


2/  4  J"<? 


dt^y 


Y^7ls 


/  6 


3 


TTL^uJ,   &^ 


/  777 


fr 


Quiz.  Have  you  been  neat  and  careful  in  your  work?  Are  all  the  dates  where  they 
should  be  in  your  books  ?  Are  you  sure  that  all  postmarks  are  in  the  folio  columns  of  cash 
book,  journal  and  ledger  ?  Have  you  any  scratches  or  blots  on  your  books  ?  Do  you  under- 
stand all  that  you  have  gone  over  ? 

43.  Make  out  a  cash  proof  and  balance  your  cash  book,  carrying  forward  the  balance 
to  the  next  debit  page  in  the  second  column  and  present  your  cash  proof  and  cash  book  to 
your  teacher. 

Check  your  ledger  in  the  following  manner: 

First.  Check  each  debit  and  each  credit  entry  in  your  journal  to  the  corresponding- 
debits  and  credits  in  your  ledger,  using  the  check  mark  as  explained  on  page  59. 

Second.  Check  all  the  debits  from  your  sales  book  to  corresponding  debits  in  the  lelger 
or  cash  book  and  the  total  of  the  sales  to  the  credit  of  Merchandise. 

Third.  Check  all  debit  entries  in  the  cash  book,  not  already  checked,  to  the  correspond- 
ing credits  in  the  ledger. 


72 


NEW  INDUCTIVE  BOOKKEEPING 


Fourth.  Check  all  credit  entries  in  the  cash  book,  since  your  last  checking,  to  the  corre- 
sponding debits  in  the  ledger. 

Fifth.     Look  through  the  ledger  entries  carefully  to  see  if  any  amounts  are  not  checked. 

44.  Make  a  trial  balance,  using  journal  ruling,  as  instructed  on  page  59.  If  there  are 
entries  in  ledger  accounts  since  the  pencil  footings  for  the  previous  balance,  make  new  pencil 
footings,  adding  the  new  entries  to  the  former  footings.  If  an  account  has  debit  and  credit 
footings,  find  the  difference  and  use  it  in  the  trial  balance  instead  of  the  footings,  always 
placing  it  on  the  same  side  as  the  larger  footings.  This  difference  can  be  recorded  in  light 
pencil  figures  in  the  explanation  column  of  the  ledger  account,  and  to  indicate  that  it  is  only 
a  memorandum  entry,  it  should  be  written  in  small  figures  in  the  explanation  column,  as  in 
the  account  with  Merchandise  shown  below.  This  is  not  a  balancing  entry  and  hence  should 
not  be  written  on  the  lesser  side. 

The  debit  excess  of  Campbell  &  Crane's  account  on  page  6  should  be  recorded  in  the 
same  manner  in  the  debit  explanation  column  of  the  ledger,  and  also  in  the  trial  balance  to  the 
debit  of  Campbell  &  Crane. 

Pursue  the  same  course  with  Hill  &  McNair's  account  as  with  Campbell  &  Crane's. 


LEDGER  BALANCE  SHOWN  IN  PENCIL  ENTRY 


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7* — 


The  Western  Milling  Co.  have  a  larger  credit  than  debit,  and  the  excess  should  be  writ- 
ten in  the  same  manner  in  the  credit  explanation  column  of  their  account,  and  also  in  the 
trial  balance  to  the  credit  of  this  firm. 

Read  "Inventories,"  page  40. 

Regarding  inventories,  it  may  be  further  observed  that  the  inventory  of  merchandise  un- 
sold is  generally  a  very  important  factor  in  determining  a  firm's  progress  in  business,  as  illus- 
trated in  the  following  examples : 

(a).  Mr.Turner  began  business  with  a  cash  capital  of  $1000,  and  without  any  debts. 
At  the  end  of  one  year,  after  collecting  all  balances  due  him  from  other  firms,  and  paying 


SET  ONE— JOBBING  GROCERY  BUSINESS  73 

all  balances  he  owed  other  firms,  his  books  showed  a  cash  balance  of  $700,  and  his  inventory 
showed  merchandise  on  hand  worth  $800.  Has  he  gained  or  lost  ?  If  his  inventory  amounted 
to  only  $200,  would  he  have  gained  or  lost  ? 

(b).  Mr.  Graham  began  business  with  a  cash  capital  of  $2000,  and  without  any  debts. 
At  the  end  of  one  year,  after  paying  all  balances  he  owed  other  firms  and  collecting  all  bal- 
ances due  him  from  other  firms,  his  books  showed  a  cash  balance  of  $1200,  and  his  inven- 
tory showed  merchandise  on  hand  worth  $500.  Has  he  gained  or  lost?  If  his  inventory 
amounted  to  $1500,  would  he  have  gained  or  lost? 

The  preparation  of  an  inventory  of  merchandise  often  requires  several  days  or  weeks, 
depending  on  the  magnitude  of  the  business,  and  the  process  is  called  "taking  stock." 

In  "taking  stock,"  the  goods  are  usually  listed  at  invoice  cost,  unless  there  should  be 
some  deterioration  in  the  value  of  the  goods,  (as  in  the  case  of  shelf-worn,  soiled,  or  out- 
of-date  stock),  or  some  marked  rise  or  fall  in  prices  after  the  goods  were  purchased.  The  pur- 
pose of  an  inventory  should  be  to  show  the  actual  cash  value  of  the  goods,  in  case  they 
should  be  thrown  on  the  wholesale  market  in  bulk. 

You  may  now  proceed  to  "take  stock"  or  prepare  an  inventory  of  such  unsold  goods  as 
are  indicated  by  the  coupons  in  your  Merchandise  envelope. 

The  following  form  contains  a  correct  list  of  the  goods  that  should  be  on  hand.  If  it 
does  not  agree  with  the  coupons  in  your  envelope,  you  have  either  lost  some  of  these,  or 
have  made  an  error  in  delivering  them  to  customers  at  the  Commercial  Exchange.  In  this 
case,  report  the  fact  to  your  teacher. 

Using  a  sheet  of  journal  paper,  write  the  heading,  "Inventory  of  Merchandise  on  hand 

191 — ,"  and  prepare  an  inventory  of  the  goods,  referring  to  the  invoices  for  prices. 

Enter  the  value  of  each  lot  in  the  first  column  and  extending  the  total  to  the  second  column  as 
in  an  ordinary  bill.  .  When  your  inventory  is  prepared,  submit  it  to  your  teacher  for  approval. 

INVENTORY  OF  MERCHANDISE  ON  HAND 

1  brl.  XX  Hams.  Inv.  8,     300  lb. 

5  brl.  Mess  Pork, 

130  cans  Leaf  Lard,  "        1300  lb. 

6  brl.  Br.  Bacon.  "  1800  lb. 
13  bx.  Oakdale  Butter,  Inv.  9.  650  lb. 
30  cases  Eggs,  "  900  doz. 

150  bu.  Potatoes, 
20  bx.  Lemons,  " 

18  brl.  Onions, 
30  brl.  Daisy  Flour,    Inv.  10, 
40  brl.  Rye  Flour, 
60  sk.  Graham  Flour,  " 

20  brl.  Rolled  Oats, 

Total 

INVENTORY  OF  FURNITURE  AND  FIXTURES 
Fur.  and  Fixt.  on  hand  estimated  at  90  per  cent  of  cost $205.20 

QUIZ 

See  if  you  are  able  to  give  satisfactory  answers  to  the  following  questions  relating  to 
your  books.     If  you  are  unable  to  answer  all  of  them,  report  the  fact  to  your^teacher. 

3.  How  much  have  you  invested  in  business,  and  what  account  shows  it? 

2.  What  do  you  understand  by  Resources  ? 

3.  What  do  you  understand  by  Liabilities? 

4.  What  do  you  understand  by  Gains  ? 

5.  What  do  you  understand  by  Losses? 


74  NEW  INDUCTIVE  BOOKKEEPING 

6.  What  do  you  understand  by  an  Inventory  ? 

7.  Besides   the   cash    balance   and   the    inventories,  what  three  ledger  accounts  show 
resources  ? 

8.  What  account  besides  the  proprietor's  shows  a  liability? 

9.  What  have  you  paid  for  merchandise  since  you  began  business  ? 

10.  What  have  you  received  for  merchandise  during  the  same  period? 

11.  How  do  you  ascertain  these  facts  about  merchandise? 

12.  If  you  were  now  to  sell  the  goods  on  hand  for  their  inventoried  value,  would  you 
gain  or  lose  on  your  merchandise?    How  much? 

13.  If  you  were  now  to  sell  your  furniture  and  fixtures  on  hand  for  their  inventoried 
value,  would  this  account  show  a  gain  or  loss?     How  much? 

14.  If  there  were  no  inventory  of  furniture  and  fixtures,  would  this  account  show  a 
loss  or  a  gain,  and  how  much  ? 

15.  Allowing  for  the  inventoried  value  of  furniture  and  fixtures  at  90  per  cent  of  cost, 
have  you  gained  or  lost  on  this  account,  and  how  much? 

16.  What  is  the  total  amount  paid  out  for  expenses?    Is  it  a  loss  or  gain? 

17.  How  would  your  net  profits  be  affected  by  increasing  the  cost  of  merchandise?  By 
decreasing  your  expenses?  By  selling  goods  at  a  higher  price?  By  buying  merchandise  at  a 
lower  price?    By  increasing  expenses? 

18.  Under  what  conditions  would  increased  sales  increase  your  profits  ?  Under  what 
conditions  would  increased  sales  diminish  your  profits? 

19.  Does  the  proprietor's  account  always  show  the  net  value  of  the  business  ? 

20.  At  what  time  does  it  show  the  net  value  of  the  business? 

21.  Would  the  net  value  of  the  business  be  increased  or  diminished  if  there  has  been  a 
gain  ?    If  there  has  been  a  loss  ? 

CLOSING  THE  LEDGER 

1.  Read  Closing  the  Books  on  page  35  and  the  Balance  Sheet  on  page  40,  after  which 
prepare  a  Financial  Statement  of  your  present  business  as  in  the  form  of  financial  statement 
shown  on  page  39,  copying  the  same  in  your  trial  balance  book  just  below  your  last  trial 
balance. 

2.  Study  the  Statement  of  Profits  and  Losses  for  the  Model  Set,  page  41,  and  the  ex- 
planation of  this  form  on  page  40,  after  which  prepare  this  statement  as  required  by  your 
present  business  and,  when  approved,  copy  it  in  your  trial  balance  book. 

3.  Study  the  Balance  Sheet  Proof  on  page  41,  and  the  explanation,  then  prepare  your 
Balance  Sheet  Proof  for  this  set  and,  if  approved,  copy  in  your  trial  balance  book,  following 
the  last  form  copied. 

4.  Read  all  the  instructions  as  to  closing  the  ledger,  pages  42  and  45,  and  then  open 
an  account  in  your  ledger  on  lower  division  of  page  1,  under  the  title  "Loss  and  Gain 
Closing." 

5.  Enter  your  inventories  of  Merchandise,  and  Furniture  and  Fixtures,  in  red  ink  on 
the  credit  side  of  the  accounts,  and  complete  the  closing  of  the  ledger,  following  the  steps  as 
described  in  the  instructions  relating  to  the  Model  Set,  pages  42  and  45.  Proceed  carefully 
and  thoughtfully  and  do  not  call  on  your  teacher,  unless  it  is  absolutely  necessary. 

6.  When  the  ledger  is  closed  and  ruled  up,  forward  your  inventories  and  the  balance  of 
the  proprietor's  investment  account,  after  which  take  a  trial  balance  of  your  ledger,  which, 
when  approved,  should  be  copied  in  your  statement  book. 

Preparing  Books  for  Inspection.  Remove  all  blots,  finger  marks,  or  other  deface- 
ments from  your  books.  Do  not  erase  the  pencil  footings  on  the  unclosed  accounts,  as  these 
will  be  needed  in  preparing  future  trial  balances.  When  your  books  are  ready  for  inspection, 
deliver  to  your  teacher  vour  blank  books,  last  trial  balance  and  statement,  office  file,  envelope 
for  outgoing  papers,  and  check-book. 

You  are  now  to  receive  your  returned  checks  from  the  bank,  with  the  bank's  statement 
of  your  account.  Before  proceeding  with  this  transaction,  carefully  read  the  following  in- 
structions relating  to  depositors'  statement. 


SET  ONE— JOBBING  GROCERY  BUSINESS 


75 


TWO  METHODS  OF  RENDERING  DEPOSITORS'  STATEMENTS 

As  indicated  on  page  61,  there  are  two  common  methods  used  by  banks  to  render  state- 
ments of  their  depositors'  accounts.  We  may  designate  these  respectively  as  the  "Pass  Book 
Method"  and  the  "Statement  Method." 


Lists  of  Cancelled  Checks 
The  Customer  Will  Preserve  This 

The  Exchange  Bank 

Checks  Paid  and  Charged  to  Account  of 


C.  H.  Benton 


From. 


Jan.  1 


19. 


To. 


Feb.  1 


.19. 


BALANCING  THE  BANK  PASS  BOOK 

The  Pass  Book  Method.  In  business, 
the  paid  checks  of  a  depositor  are  returned 
to  him  periodically  by  the  bank,  usually  at 
the  end  of  each  month,  or  oftener  if  the  de- 
positor wishes  them.  The  returned  checks 
are  accompanied  by  a  list  showing  their 
amounts  and  totals,  and  by  the  depositor's 
pass  book,  duly  written  up  and  balanced. 

As  soon  as  the  depositor  receives  the 
cancelled  checks,  he  should  compare  them 
with  his  check  stub  entries,  checking  all  en- 
tries for  which  the  checks  are  returned.  If 
any  of  the  checks  issued  have  not  been  pre- 
sented to  the  bank  for  payment,  the  stub 
entries  will  remain  unchecked,  and  the  bank 
balance  on  the  check  book  will  exceed  the 
balance  on  the  pass  book  by  the  amount  of 
these  unpaid  checks. 

The  accompanying  forms  illustrate  the  bank's  list  of  returned  checks,  also  a  pass  book 
after  being  written  up  and  balanced  by  the  bank  clerk. 

In  place  of  the  above  forms  of  listing  returned  checks,  many  banks  list  the  depositor's 
checks  on  the  adding  machine  and  hand  him  the  tape-list  with  his  cancelled  checks. 


9 

£5 

199 

50 

100 

4 

75 

50 

363 

50 

THE     PASS     BOOK     BALANCED 


».  EXCHANGE  BANE  .» 


Acc't     With. 


^2^/&JL^^^r^ Cr. 


^ 

^ 


la^t// & 


/^ 


£*£> 


jL 


oJ-e^L^ 


/  000 


kT^.ZuT 


Ztxf'PKj- 


P 


■■'£- 


& 


£ 


i/~Z^a,/.-4-<z£*/. 


/j^Xz-J^ez^l^L^y 


t£  /,4 


J~fi 


jNjL 


\& 


lA&A 


/sto 


JiU&- 


£ 


^j%?_y^,^,^  *J 


<ff6yf0 


Statement  Method.  In  this  method,  the  balancing  of  the  pass  book  is  dispensed  with, 
this  book  being  used  merely  for  recording  the  deposits  and  having  the  right  and  left  pages 
of  the  book  ruled  the  same.  The  bank  renders  a  statement  to  the  depositor  on  the  first  of 
the  month  with  the  cancelled  checks,  giving  every  deposit  for  the  month  and  itemizing  every 
check  that  has  been  paid  for  the  depositor.  The  records  are  made  on  these  statement  sheets 
during  the  month  as  the  transactions  occur,  and  after  the  entries  have  been  made  for  the 
closing  business  day  of  the  month,  the  statement  and  cancelled  checks  for  a  depositor  are 
placed  in  an  envelope  and  are  ready  for  delivery  to  him  promptly  on  the  first  business  day  of 
the  month. 


76 


NEW  INDUCTIVE  BOOKKEEPING 


The  Statement  Method  has  many  advantages  over  the  Pass  Book  Method,  both  for  the 
banker  and  the  depositor.  It  is  therefore  coming  more  and  more  into  use  among  progressive 
banks,  and  will  be  used  in  your  present  course.  The  form  below  illustrates  a  depositor's 
monthly  statement.     Read  carefully  the  explanation  relating  to  it. 

DEPOSITOR'S  STATEMENT 

Statement  jpi  Account       ^^v^^din^g^^ '/  ia... 

/&       VmirTiprs  returned. 


77. 


^Verified 


in  account  with       THE,  EXCHANGE  BANK 

OAKLAND 


CHECKS 

CHECKS 

DEPOSITS 

No. 

Day 

Amount 

No. 

Day 

Amount 

Day 

Amount 

1 

\J  ff 

r* 

13 

an 

i? 

Balance 

2 

y* 

-is 

14 

/ 

&  t 

l/" 

/  2-J 

vV 

$       3 

Yi 

'/+ 

15 

4 

ivT 

f 

V>4 

ft 

4 

JJl 

'f 

16 

'I 

J~* 

/J" 

j^r 

5 

f« 

fa- 

17 

Sif 

/  J 

rV 

t*i 

nS- 

6 

•ai 

ff 

18 

-A 

/A 

r 

7 

-y* 

q> 

19 

t 

q'f 

qj~ 

8 

/ 
yi 

-r^ 

20 

1 

J  'f  s 

'J- \3 

9 

li 

Is 

21 

io 

■fit 

Vi 

22 

tl 

,J  I 

#/** 

23 

12 

"ya 

/  o 

24 

Credits 

J~fS 

su 

+  i'j 

*  -r 

Debits 

JUtf 

/S 

Balance 

vTf 

?/ 

Please  examine  balances  and  vouchers  and  report  at  once  if  any  error  is  found. 


EXPLANATION 

The  above  form  shows  a  monthly  statement  rendered  by  the  Exchange  Bank  to  a  de- 
positor, Arthur  Jones. 

There  are  two  general  divisions  for  checks  and  one  for  deposits,  since,  in  nearly  all 
cases,  there  will  be  a  much  larger  number  of  checks  than  deposits.  Each  check  division  has 
three  columns;  the  first  is  for  consecutive  numbering,  the  number  enabling  the  bank  clerk 
to  determine  the  number  of  entries  without  counting  them.  Thus,  the  last  check  drawn, 
being  entered  opposite  the  number  "16,"  the  clerk  knows  that  sixteen  checks  or  othe: 
vouchers  are  to  be  accounted  for.  The  second  column  is  for  the  day  of  the  month.  As  the 
statement  covers  business  for  but  one  month,  a  column  for  the  month,  as  in  ordinary  date  col- 
umns, is  unnecessary. 

The  deposit  division  has  columns  for  dates  and  amounts.  If  there  is  a  balance  carried 
forward  from  the  previous  month,  this  is  entered  opposite  the  word  "balance"  at  the  top  of 
the  column.  If  the  first  check  column  is  filled,  the  footing  is  entered  and  forwarded  to  the 
top  of  the  next  column.  In  the  summary  at  the  bottom  of  the  deposit  columns,  the  total 
amount  of  the  checks  (debits)  is  subtracted  from  the  total  deposits  (credits)  and  the  differ- 
ence shows  the  bank  balance  at  the  close  of  the  month  when  the  statement  is  rendered. 

Another  form  used  by  many  bankers  is  to  carry  the  deposit  columns  to  the  left,  and  the  two  check 
columns  to  the  right.     The  tablet  statements  will  follow  this  form. 

You  may  now  call  for  your  bank  statement  and  your  paid  checks,  and  compare  the  latter 
with  the  entries  of  same  in  your  check  stubs.     If  any  checks  are  unpaid,  their  sum  added  to 


SET  ONE— JOBBING  GROCERY  BUSINESS 


77 


your  bank  balance  shown  on  your  last  check  stub  will  equal  the    balance    as    shown  on  the 
bank  statement.     A  memorandum  of  this  should  be  penciled  on  the  last  stub  balance. 


Office  Course.    You    will    get    the    statement 
and  the  returned  checks  at  the  bank. 


45. 


Tablet  Course.  You  will  find  your  bank  state- 
ment in  the  Bank  compartment  of  your  community 
file,  and  the  teacher  will  hand  you  your  paid  checks 
after  he  has  inspected  your  outgoing  papers. 


Sell  to  Thornton  &  Blake,  125  North  Main  Street,  on  account : 
5  brl.  Mess  Pork  @  $9.50       per  brl. 

40  cans  L.  Lard  @       .12^  per  lb. 

3  bx.  Oakdale  Butter  @       .19       per  lb. 

Proceed  as  in  previous  sales  on  account. 
Open  a  ledger  account  with  Thornton  &  Blake  on  page  8. 

46.  Order  of  Dalton  &  White  (or  your  Wholesale  Office  firm)  to  be  paid  for  with 
your  note  at  sixty  days  without  interest,  the  following  bill  of  goods : 

15  bg.  Java  Coffee  100  bx.  Joy's  Soda  Crackers 

20  ch.  Japan  Tea  50  cans  Sunlight  Syrup 

Promissory  Notes.  A  promissory  note  is  a  written  promise  to  pay  a  stated  sum  of 
money  at  a  specified  time. 

The  Original  Parties  to  a  note  are  the  Maker,  or  party  who,  by  the  act  of  signing  the 
note,  makes  the  promise,  and  the  Payee,  or  the  party  to  whom  the  note  is  made  payable. 

Note. — In  law,  the  persons  who  enter  into  any  legal  relation  are  called  "parties,"  as  the  "parties  to  a 
contract,"  or  the  "party  to  a  suit,"  etc. 

The  accompanying  cut  illustrates  a  standard  form  of  promissory  note  and  its  stub  prop- 
erly filled  out.  In  entering  the  amounts  on  a  note  the  same  care  should  be  observed  to  pre- 
vent "raising"  or  other  alteration  as  in  the  case  of  a  check. 

In  business,  notes  are  usually  made  payable  at  a  bank  which  is  specified  in  the  note.  In 
the  absence  of  such  specification,  the  law  makes  a  note  payable  at  the  legal. residence  of  the 
maker. 

FORM  OF  NOTE  WITH  STUB  ENTRY 


To  J?.d  ?k^££™. 

For.. 

D ate    i^-w-'.  /<?,  /?- 

Time   f<?  c/^zsyj — 


Due    /^yi^.  //?,  /f   . 

N9.2pL $ffZ* 


You  may  now  fill  out  the  first  blank  note  in  your  note  book,  following  the  model  form  except  as  to 
location,  date,  amount  and  parties.  As  the  note  is  not  to  bear  interest,  a  dash  should  be  drawn  in  the 
blank  space  for  rate  of  interest.    Be  careful  to  make  the  required  stub  entries  before  removing  the  note. 


Office  Course.    Deliver  the  note  at  the  office 
where  you  make  the  purchase. 


Tablet  Course.  Deliver  the  note  through  Out- 
going Papers  and  receive  the  invoice  and  merchan- 
dise through  your  Wholesale  pad. 


For  the  rules  of  debit  and  credit  and  the  journal  entry  required  in  this  transaction,  see 
pages  23  and  30.  Write  on  a  piece  of  waste  paper  the  journal  entry  that  you  think  is  re- 
quired for  this  transaction  and  submit  it  to  your  teacher  for  approval.  If  approved,  copy  it 
in  your  journal.  Open  an  account  wkh  Bills  Payable  on  the  upper  division  of  page  5  in 
your  ledger,  after  which,  post  your  journal  entry  to  the  proper  ledger  accounts.  Do  not  omit 
to  index  your  account  with  Bills  Payable,  or  to  enter  the  proper  dates  and  folio  numbers  in 
both  journal  and  ledger.    In  posting  an  entry  to  the  Bills  Payable  account  the  name  of  the 


78 


NEW  INDUCTIVE  BOOKKEEPING 


firm  or  person  to  whom  the  note  is  payable  should  be  written  in  the  explanation  columns,  as 
illustrated  below.  This  plan,  which  should  also  be  followed  in  the  Bills  Receivable  account, 
will  enable  us  to  determine  at  a  glance  the  firms  that  we  owe  on  notes  outstanding-  and  the 
firms  that  owe  us  on  notes  receivable. 


BILLS  PAYABLE  ACCOUNT  IN  LEDGER 


/?0A 


,iW 


/  / -^Lr>&£+-r7Jr&-\k 


f  23 


v/> 


47.     Sell  to  A.  W.  Sumner,  426  Delmar  Avenue 

10  ibrl.  Daisy  Flour  @  $4.40 


per  brl. 
per  brl. 
per  bx. 


5  brl.  Rolled  Oats  @     6.30 

10  bx.  Lemons  @     2.90 

10  cs.  Eggs  @       .18^4  per  doz. 

Receive  in  payment  Mr.  Sumner's  note  payable  on  or  before  thirty  days  after  date  with- 
out interest.  A  note  of  this  kind  is  payable  at  the  option  of  the  maker,  any  time  before 
maturity. 


Tablet  Course.  Deliver  the  merchandise  with 
receipted  bill  through  Outgoing  Papers  and  receive 
the  note  through  your  Commercial  Exchange  pad. 


Office  Course.  Carry  out  this  transaction  at 
the  Commercial  Exchange,  delivering  the  merchan- 
dise with  receipted  bill,  and  a  note  filled  out  in  your 
favor  for  Sumner's  signature  by  the  clerk  in  the 
Commercial  Exchange.  Remove  this  note  from  the 
back  of  your  note  book,  making  no  stub  entries. 

See  entry  No.  4  in  Model  Sales  Book,  page  64. 

As  Sumner  will  not  be  debited  in  the  ledger,  a  check  mark  is  made  in  the  folio  column  next  to  his 
name.  Debit  Bills  Receivable,  opening  an  account  in  the  ledger  on  lower  half  of  page  5.  Enter  the  ledger 
folio  opposite  Bills  Receivable  in  the  sales  book.  Enter  Sumner's  name  in  the  explanation  column  of  Bills 
Receivable. 

48.  Pay  cash  for  your  drayage  bill  to  date,  $15.25,  taking  a  receipted  bill  which  you 
will  file  with  Receipts  and  Vouchers.     Charge  to  Expense  in  cash  book. 

49.  Sell  to  Braille  &  McKnight,  receiving  their  check  in  payment : 
2  bg.  Java  Coffee  @  $  .24  per  lb. 

ch.  Japan  Tea  @       .82 

bu.  Potatoes  @       .65 

cs.  Eggs  @       .19  per  doz. 


per  lb. 
per  bu. 


2 

50 
10 
3  brl.  Onions  @     3.70  per  fori. 

50.  Find  from  your  ledger  the  amount  due  you  on  account  from  Campbell  &  Crane. 
•  Collect  cash  for  the  same,  giving  receipt  in  full  of  account. 

Office   Course.    Leave    your    receipt    at    the  Tablet  Course.    Deliver  your  receipt  through 

Commercial  Exchange  and  receive  the  cash  from  Outgoing  Papers  and  receive  your  cash  from  Com- 
that  office.  munity  Cash. 

Post  the  entry  to  Campbell  &  Crane's  credit,  checking  the  debit  and  credit  in  their  account  by  using 
the  X-mark  as  explained  in  Transaction  35. 


51.     Receive  a  check  for  $75  from  A.  W.  Sumner,  to  apply    on    his 
Transaction  47. 


note  received  in 


Office  Course. 

mercial  Exchange. 


Receive  this  check  at  the  Corn- 


Tablet   Course.    Receive   this   check   through 
your  Commercial  Exchange  pad. 


Make  entry  in  the  cash  book,  crediting  Bills  Receivable.  Endorse  this  payment  on  the  back  of  Sum- 
ner's note,  right  end,  writing  the  current  date  and  "Received  on  within  note  ($75)  Seventy-five  Dollars." 
Do  not  sign  your  name  to  this  endorsement,  as  your  signature  might  transfer  the  note  in  blank  and  make 
it  payable  to  anyone  who  might  get  possession  of  it. 

Partial  payment  of  a  note  should  be  endorsed  on  the  end  of  the  note  opposite  the  place  for  transfer 
endorsements. 


SET  ONE— JOBBING  GROCERY  BUSINESS  79  ' 

52.  Draw  your  check  for  $500  to  be  applied  as  a  payment  on  the  note  you  gave  in 
Transaction  46. 

Office  Course.    Make    this    payment    at    the  Tablet  Course.    Deliver    this    check    through 

office  department  where  you  delivered  the  note.  See  Outgoing  Papers.  Take  the  note  from  Outgoing 
that  the  payment  is  properly  endorsed  on  the  note.  Papers  and  hand  it  to  your  teacher,  who  will  make 

the  proper  endorsement,  after  which  return  the  note 

to  Outgoing  Papers. 

Make  entry  in  cash  book,  debiting  Bills  Payable. 

An  endorsement  for  part  payment  of  a  note  should  always  be  made  by  the  payee  of  the  note  or  by 
his  direction. 

53.  Sell  to  T.  C.  Martin  &  Co.,  963  Fairfax  Avenue,  on  their  note  payable  on  or  before 
30  days  from  date: 

15  brl.  Rye  Flour  @  $3.75  per  brl. 

20  sk.  Graham  Flour  @  .90  per  sk. 

5  brl.  Rolled  Oats  @  6.30  per  brl. 

2  bg.  Java  Coffee  @  .25  per  lb. 

5  ch.  Japan  Tea  @  .75  per  lb. 

Follow  the  instruction  given  in  Transaction  47. 

54.  Close  out  the  remaining  goods  of  Invoice  No.  10,  by  selling  the  following  to  Hill, 
McNair  &  Co.,  on  account : 

20  brl.  Daisy  Flour  @  $4.45  per  brl. 

25  brl.  Rye  Flour  @     3.75  per  brl. 

40  sk.  Graham  Flour  @       .85  per  sk. 

10  brl.  Rolled  Oats  @     6.25  per  brl. 

55.  Send  your  order  for  the  following  invoice  of  flour,  using  an  order  ticket  and  asking 
them  to  bill  on  account: 

50  brl.  Daisy  Flour  50  brl.  Rye  Flour 

40  brl.  Acme  Oats  200  sk.  Graham  Flour 

Follow  the  instructions  governing  previous  purchases,  ordering  of  the  Western  Milling  Co.,  unless 
the  teacher  designates  another  firm. 

56.  L.  P.  Moore  &  Co.  settle  their  account  to  date  by  delivering  their  note  at  ten  days 
for  the  amount,  bearing  interest  at  six  per  cent. 

Office  Course.    Fill  out  a  blank  note  in  your  Tablet    Course.    Receive    the    note    through 

favor,  on  the  conditions  named,  and  take  it  to  the  your  Commercial  Exchange  pad  and  deliver  the  re- 
Commercial  Exchange  for  signature.  ceipt  through  Outgoing  Papers. 

Make  a  journal  entry,  debiting  Bills  Receivable  and  crediting  Moore  &  Co.  Post  the 
two  items  to  the  ledger,  making  proper  explanatory  entry  in  Bills  Receivable  as  instructed 
in  Transaction  46.  As  this  note  pays  in  full  your  bill  for  the  sale  in  Transaction  37,  check 
off  both  ledger  amounts  as  instructed  in  Transaction  35. 

57.  Give  the  Western  Milling  Co.,  or  the  office  firm  that  takes  their  place,  your  check 
for  the  balance  due  on  your  purchase  in  Transaction  34  less  the  payment  you  made  in  Trans- 
action 38. 

Post  to  the  ledger  and  check  off  the  credit  and  the  two  debit  entries  that  balance  it. 

58.  Receive  from  Hill,  McNair  &  Co.  currency  in  payment  of  their  debit  in  Transac- 
tion 32  less  their  credit  in  Transaction  40. 

Post  to  the  ledger  and  check  off  the  debit  and  the  two  credits  that  balance  it  as  in  the 
previous  transaction. 

59.  Make  your  cash  proof  and  balance  your  cash  book.  Hand  the  cash  proof  and  your 
cash  book  to  the  teacher  for  inspection. 

60.  Deposit  in  bank  all  checks  on  hand  and  $200  in  currency.    Indorse  the  checks. 

61.  Sell  to  Thornton  &  Blake,  125  North  Main  Street,  on  account  at  5  days : 

1  brl.  XX  Hams  @  15c  per  lb. 

3  brl.  Breakfast  Bacon  @  14c  per  lb. 


80 


NEW  INDUCTIVE  BOOKKEEPING 


In  posting  a  sale  on  account  for  a  given  period,  write  the  period  of  time  in  the  ledger 
accomit,  in  the  explanation  column,  like  the  second  debit  entry  in  model  form  below. 


LEDGER  DEBIT    WITH  TERMS  OF  SALE 


3 V 


^J 


/  2  4 


2-J'  ^r 


3 


/  *?  / 


7* 


62.     Give  your  check  for  $6.75,   favor  Central  Lighting  and  Power  Co.,  to  pay  for 
lighting  your  store  room  to  date.   They  hand  you  receipt. 


Office  Course.    Leave  this  check  at  the  Com- 
mercial Exchange,  taking  a  receipt. 


Tablet  Course.  Deliver  this  check  through 
Outgoing  Papers.  The  receipt  will  be  delivered 
through  your  Commercial  Exchange  pad. 


63. 


64. 


Sell  to  Hall  Bros.,  29  Walnut  Street,  receiving  their  check  in  payment: 

5  bx.  Oakdale  Butter  @  19y2c  per  lb. 

10  cs.  Eggs  @  16c       per  doz. 

20  bx.  Soda  Crackers  @  85c       per  bx. 

Sell  to  Campbell  &  Crane,  No.  16  River  Street,  on  account : 

10  brl.  Daisy  Flour  @  $4.45  per  brl. 

10  brl.  Rye  Flour  @     3.65  per  brl. 

5  brl.  Acme  Oats  @     6.25  per  brl. 

40  sk.  Graham  Flour  @       .85  per  sk. 


65. 


Close  out  the  remaining  goods  of  Invoice  8,  by  selling  to  C.  W.  Melville,  No.  21 
Maple  St.,  on  his  note  at  ten  days,  the  following: 

90  cans  Leaf  Lard  @  $  .12^  per  lb. 

3  brl.  Bacon  @       .14       per  lb. 

66.  Receive  Thornton  &  Blake's  check  for  $125  to  apply  on  account. 
Collect  this  in  the  usual  manner,  giving  a  receipt. 

67.  Draw  cash  from  bank  on  your  own  check,  $75,  to  use  for  currency  payments. 

Should  a  cash  book  entry  be  made  for  the  last  transaction? 

After  deciding  as  to  the  last  question,  report  your  conclusion  to  your  teacher. 

68.  Give  your    check    for    $250    to    apply  as  a  second  payment  on  your  note  given  in 
Transaction  46. 

Do  not  forget  to  itemize  this  entry  in  Bills  Payable.     Proceed  as  in  Transaction  52. 

69.  Receive  cash  in  payment  of  T.  C.  Martin  &  Co.'s  note. 

Write  across  the  face  of  the  note  "Paid,"  and  the  date,  and  deliver  the  cancelled  note  for  a  receipt. 

Office  Course.    Deliver  the  note  at  the  Com-  Tablet  Course.    Deliver  the  note  through  Out- 

mercial  Exchange  and  receive  the  cash.  going  Papers  and  receive  the  cash  as  usual. 

70.  Make  a  cash  proof  and  balance  your  cash  book.     Foot  your  sales  book  and  post 
the  merchandise  credit. 

71.  Check  your   ledger   accounts   and   take  a  trial  balance,  following  instruction  after 
Transaction  21  regarding  the  entry  of  ledger  totals  and  balance  in  pencil. 

If  your  trial  balance  does  not  balance,  read  carefully  and  follow  the  instruction  below 
regarding  the  detection  of  errors. 

DETECTION  OF  ERRORS  IN  TRIAL  BALANCES 

•  1.     Review  carefully  the  addition  of  the  columns  in  the  trial  balance,  adding  from  the 
top  to  the  bottom  and  verifying  the  results  by  adding  from  the  bottom  to  the  top. 


SET  ONE— JOBBING  GROCERY  BUSINESS  81 

2.  Add  carefully  all  columns  in  the  ledger  and  verify  all  pencil  footings,  which  should 
always  be  in  small  figures  below  the  last  item  of  each  account  and  never  on  the  next  writing 
line,  which  should  be  kept  for  the  next  entry.  See  that  the  correct  balances  are  carried  to  the 
trial  balance. 

3.  Find  the  exact  amount  out  of  balance  and  look  for  this  amount  in  journal,  cash 
book,  sales  book  and  ledger.  Also  look  for  one-half  of  this  amount  if  it  is  an  even  number, 
and  see  if  such  an  amount  has  been  posted  to  the  wrong  side  of  the  ledger. 

4.  If  the  amount  out  of  balance  is  divisible  by  nine,  the  error  is  likely  to  be  a  transpo- 
sition of  figures,  (as  725  written  for  527,  making  an  error  of  198,  which  is  divisible  by  9). 
If  it  becomes  necessary  to  re-check  the  ledger,  (see  paragraph  8  below)  it  will  be  well  to 
watch  for  numbers  transposed,  as  this  is  one  of  the  most  common  errors  with  inexperienced 
bookkeepers. 

5.  If  the  error  is  composed  of  l's  as  1,  11,  111,  etc.,  or  9's-as  9,  99,  999,  etc.,  it  is  prob- 
ably an  error  in  addition  and  the  columns  likely  to  produce  the  error  should  be  carefully 
added. 

6.  See  that  your  cash  book  and  sales  book  have  been  correctly  added;  and  also  that 
the  sales  footings  have  been  properly  posted. 

7.  Look  through  your  ledger  and  see  if  all  balancing  entries  have  been  correctly  for- 
warded  and  all   inventories  have  been  brought  down  correctly. 

8.  If  the  above  methods  do  not  locate  the  error,  the  ledger  entries  should  all  be  checked 
again,  a  different  check  mark  being  used.  In  this  second  checking  you  should  see  that  there 
is  a  debit  for  every  credit.     Any  item  unchecked  will  throw  the  ledger  out  of  balance. 

Note. — Notwithstanding  that  the  Trial  Balance  proves,  several  kinds  of  errors  may  have  been  made 
in  the  bookkeeping,  as  for  instance  the  following: 

1.  Errors  in  computation,  by  which  incorrect  original  entries  are  made. 

2.  Posting  an  item  to  the  wrong  account. 

3.  Failure  to  enter  a  transaction  in  the  journal  or  other  book  of  original  entry. 

4.  Failure  to  post  both  debit  and  credit  of  a  journal  entry. 

TRANSACTIONS  CONTINUED 

72.  Hand  your  books  and  office  file  to  the  teacher  for  inspection. 

73.  Have  your  pass  book  balanced  or  call  for  a  bank  statement  with  your  cancelled 
checks.  You  will  receive  the  statement  and  cancelled  checks  as  explained  on  pages 
76  and  77. 

Compare  the  returned  checks  with  your  check  stub  entries  as  previously  explained,  and 
file  away  your  paid  checks  which  should  be  carefully  kept  as  receipts  or  vouchers  to  prove 
payments  that  may  be  called  in  question  at  a  later  date. 

Reconcile  bank  balance  with  bank  statement,  when  the  bank  does  not  report  all  checks 
paid. 

74.  Sell  to  L.  P.  Moore  &  Co.,  125  Main  Street,  the  remaining  goods  of  Invoice  9  at 
the  following  prices : 

10  bx.  Cal.  Lemons  @  $2.90  per  bx. 

5  bx.  Oakdale  Butter  @       .21  per  lb. 

100  bu.  Potatoes  (a)       .65  per  ibu. 

15  brl.  Onions  @     3.75  per  brl. 

They  hand  you  their  check  for  $100  to  apply  on  this  sale;  balance  on  account. 

Enter  the  entire  sale  from  the  sales  book  to  the  debit  of  Moore  &  Co.,  and  credit  them  for  the  $100 
from  the  cash  book.  Give  credit  on  your  invoice  to  Moore  &  Co.  for  the  check,  which  you  will  receive 
when  you  deliver  the  invoice  and  merchandise. 

75.  Pay  cash,  $12.75,  for  city  taxes  on  your  stock  of  goods,  taking  a  receipt,  which 
you  will  file.     Charge  to  Expense. 

76.  Order  the  following  bill  of  produce  for  which  you  are  to  give  your  note  at  fifteen 
days  in  payment,  the  note  bearing  interest  at  6  per  cent : 

20  bx.  Oakdale  Butter  100  bu.  White  Beans 

•      25  cs.  Eggs  250  bu.  Potatoes 

Follow  previous  instructions,  ordering  of  the  Fenton  Produce  Co.,  unless  the  teacher  designates  an- 
other firm.     This  invoice  will  amount  to  $515,  and  your  note  should  be  written  for  this  amount. 


82  NEW  INDUCTIVE  BOOKKEEPING 

77.  Receive  currency  from  L.  P.  Moore  &  Co.  in  payment  of  their  note  with  ten  days' 
interest  at  the  given  rate. 

Rule  for  Writing  Fractional  Amounts.  Fractions  of  a  cent  are  never  written  in  money  columns.  If 
the  fraction  is  one-half  cent  or  more,  it  is  recorded  as  a  cent ;  if  less  than  one-half  cent,  it  is  dropped. 
Fractions  are  written  and  used  for  prices,  weights,  etc.,  the  foregoing  rule  applying  only  to  amounts  ex- 
tended to  money  columns. 

Office  Course.    Collect  cash   for   this  note  at  Tablet  Course.    Mark  the  note  paid  and  de- 

the  Commercial  Exchange.  liver  it  through  Outgoing  Papers,  taking  cash  for 

same  from  Community  Cash. 

Make  two  entries  in  the  cash  book,  crediting  Bills  Receivable  with  the  face  of  the  note  and  Interest 
with  the  amount  received  for  interest  as  shown  in  the  entry  for  Jan.  18,  in  the  model  cash  book,  page  34. 

Post  these  credits,  opening  an  account  with  Interest  on  page  4,  reserving  all  of  page  3 
for  Merchandise. 

78.  Give  your  check  to  pay  the  balance  due  on  your  note  given  in  Transaction  46 

This  note  should  have  two  indorsements  for  the  payments  made  in  Transactions  52  and  68,  and  the 
remainder  after  deducting  these  indorsements  will  be  the  amount  you  should  pay. 

Office  Course.  Make  this  payment  at  the  office  Tablet  Course.    Take  the  note  from  Outgoing 

department  where  you  delivered  the  note  and  re-  Papers  and  hand  it  to  your  teacher,  who  will  mark 
ceive  the  cancelled  note.  File  the  ncte  in  "Receipts  the  note  "Paid"  if  your  check  is  written  for  the  cor- 
and  Vouchers."  rect  amount.     Place  the  check  in  Outgoing  Papers 

and  file  the  note  in  "Receipts  and  Vouchers." 

Turn  to  the  stub  of  this  note  in  your  note  book  and  write  diagonally  across  it  "Paid"  and  the  cur- 
rent date. 

When  you  post  this  payment  to  the  ledger,  check  (X-mark)  the  three  debits  and  the  one  credit  per- 
taining to  this  note,  indicating  the  payment  of  the  note  in  full. 

79.  Sell  to  C.  M.  Harlan,  126  Park  Avenue,  receiving  currency  in  payment : 

3  bg.  Java  Coffee  @  $  .24  per  lb. 

3  ch.  Japan  Tea  @  .85  per  lb. 

20  cans  Sunlight  Syrup  @  .55  per  can. 

10  brl.  Daisy  Flour  @  4.45  per  brl. 

80.  Deposit  in  bank  all  checks  on  hand  and  $250  in  currency. 

81.  Receive  currency  of  A.  W.  Sumner  to  pay  balance  of  his  note  due  you.  The  bal- 
ance due  on  this  note  will  be  the  face  of  the  note  less  the  amount  received  to  apply  on  the  note 
in  Transaction  51. 

Cancel  the  note  by  writing  across  the  face  "Paid"  and  the  current  date. 

Office  Course.    Deliver  the  note  at  the  Com-  Tablet  Course.    Deliver  the  note  through  Out- 

mercial  Exchange,  where  you  will  receive  the  cash.  going  Papers  and  take  the  cash  as  usual. 

When  you  post  this  credit,  check  the  debit  representing  the  face  of  the  note  and  the  two  credits  in- 
dicating the  note  paid  in  full. 

82.  Hill,  McNair  &  Co.,  45  Eagle  Street,  hand  you  $250  in  currency  to  apply  on  ac- 
count, and  purchase  the  following  goods  on  account : 

5  ch.  Japan  Tea  @  $  .82^  per  lb. 

40  bx.  Joy's  Soda  Crackers  @       .85  per  bx. 

5  brl.  Acme  Oats  @     6.35  per  brl. 

80  sk.  Graham  Flour  @       .85  per  sk. 

Give  credit  for  the  cash  in  the  cash  book,  rendering  a  receipt,  and  enter  the  sale  in  the  sales  book, 
delivering  an  invoice  with  the  merchandise. 

Office  Course.    Leave  the  receipt  and  the  in-  Tablet  Course.    Deliver   the  receipt  and   the 

voice  and  merchandise  at  the  Commercial  Ex-  invoice  and  merchandise  through  Outgoing  Papers, 
change,  where  you  will  receive  the  cash.  taking  cash  as  usual. 

83.  Sell  to  L.  P.  Moore  &  Co.,  125  E.  Main  Street,  the  following  goods' on  account: 

10  brl.  Acme  Oats  @  $6.20  per  brl. 

20  brl.  Rye  Flour  @     3.75  per  brl. 

2  bx.  Butter  @       .21^  per  lb. 

5  cs.  Eggs  @       .17  per  doz. 

50  bu.  Potatoes  @       .65  per  bu. 


SET  ONE— JOBBING  GROCERY  BUSINESS  83 


They  hand  you  their  check  for  $150  to  apply  on  account.     Proceed  as  in  Transaction  74. 

84.  Receive  a  check  for  $175  from  C.  W.  Melville  to  apply  on  his  note. 
Indorse  the  payment  on  the  back  of  the  note  as  usual. 

85.  Give  the  Western  Milling  Co.,  or  the  firm  you  deal  with  in  their  stead,  your  check 
for  $200  to  apply  on  account. 

86.  Sell  to  Chapman  &  Sons,  75  No.  Hall  Street,  for  cash,  the  remaining  goods  of  In- 
voice 11  at  the  following  prices : 

8  bg.  Coffee  @  25c  per  lb. 

5  bx.  Japan  Tea  (250  lb.)  @  85c  per  lb. 

40  bx.  Soda  Crackers  @  80c  per  bx. 

30  cs.  Sunlight  Syrup  @  65c  per  can. 

Make  out  your  cash  report  and  balance  your  cash,  reporting  to  your  teacher  as  usual. 

87.  Receive  cash  from  Thornton  &  Blake  in  full  of  their  account. 

Write  after  the  firm  name  in  the  cash  book  entry  in  the  explanation  column,  "Bal.  acct."  Check 
and  rule  up  the  account. 

88.  Pay  your  note  No.  2,  issued  in  Transaction  76,  and  fifteen  days'  interest  at  the  given 
rate,  making  the  total  payment  in  cash. 

Office  Course.    Make  this  payment  at  the  of-  Tablet    Course.    Deliver    the    cash    through 

flee  where  you  gave  the  note,  receiving  back  the  Community  Cash.  Remove  the  note  from  Outgoing 
cancelled  note.  Papers  and  have  the  teacher  mark  it  "Paid." 

File  the  paid  note  in  your  "Receipts  and  Vouchers." 

Make  entry  on  the  credit  side  of  your  cash  book,  following  the  model  form  as  shown  in  the  entry 
for  Jan.  14  in  the  model  cash  book,  page  35. 

89.  Receive  cash  from  Campbell  &  Crane  to  pay  for  their  purchase  in  Transaction  64. 
Give  a  receipt  in  full  of  account. 

90.  C.  H.  Manning  buys  for  cash  all  your  remaining  merchandise  at  ten  per  cent  above 
cost.     You  should  have  on  hand  for  this  sale,  the  following  goods : 

80  sk.  Graham  Flour  18  bx.  Oakdale  Butter 

30  brl.  Daisy  Flour  20  cs.  Eggs 

20  brl.  Rolled  Oats  100  bu.  Wh.  Beans 

20  brl.  Rye  Flour  200  bu.  Potatoes 

Bill  these  goods  at  cost  prices  as  shown  by  your  invoices ;  then  add  ten  per  cent  to  the 
footing  of  the  bill.  Receipt  the  bill  and  receive  payment  in  currency  as  in  previous  transac- 
tions. 

91.  Receive  currency  from  Hill,  McNair  &  Co.  to  balance  their  account,  giving  a  re- 
ceipt in  full. 

92.  Give  your  check  to  the  Western  Milling  Co.  in  full  of  their  account,  taking  a  re- 
ceive for  same. 

93.  Receive  currency  for  balance  due  on  note  of  C.  W.  Melville.  Mark  the  note  paid 
in  full  and  deliver  it  when  you  receive  payment. 

94.  Receive  currency  from  L.  P.  Moore  &  Co.  in  full  of  their  account,  giving  a 
receipt. 

95.  Sell  your  furniture  and  fixtures  to  L.  P.  Moore  &  Co.  for  cash,  $100,  giving  a  re- 
ceipt for  same. 

96.  Deposit  all  checks  and  cash  you  have  on  hand,  indorsing  the  checks  as  illustrated 
on  page  67. 

97.  Make  your  cash  proof  and  balance  your  cash  book.  Complete  your  posting,  check 
your  ledger  and  make  a  trial  balance  and  statement. 


84  NEW  INDUCTIVE  BOOKKEEPING 

98.  Write  a  check  in  favor  of  your  teacher  for  the  balance  of  cash  you  have  in  bank 
and  charge  this  to  your  investment  account. 

99.  Leave  your  pass  book  at  bank  to  be  balanced  or  call  for  a  bank  statement  with  your 
cancelled  checks. 

Proceed  as  in  Transaction  73.  . 

100.  Verify  your  bank  statement,  comparing  your  returned  checks  with  the  correspond- 
ing stub  entries  in  your  check  book.  Close  your  cash  book  and  ledger  and  submit  your  books 
and  office  file  for  inspection,  also  deliver  your  "Incoming  Currency"  to  the  teacher. 

GENERAL  REVIEW  QUIZ 

1.  What  is  the  general  rule  for  debit  and  credit? 

2.  What  is  the  rule  for  debiting  and  crediting  persons? 

3.  What  results  may  be  shown  by  a  personal  account,  if  not  in  balance? 

4.  What  is  the  rule  for  debiting  and  crediting  Cash? 

5.  What  kinds  of  business  papers  are  considered  as  cash? 

6.  Can  the  credits  of  Cash  exceed  the  debits  ? 

7.  What  results  does  a  Cash  balance  show  ? 

8.  When  should  Bills  Receivable  be  debited,  and  when  credited  ? 

9.  What  business  papers  are  classed  as  bills  receivable? 

10.  What  result  is  shown  by  Bills  Receivable  account,  if  not  in  balance  ? 

11.  Can  the  credits  of  Bills  Receivable  exceed  the  debits? 

12.  When  should  Bills  Payable  be  debited,  and  when  credited  ? 

13.  What  result  is  shown  by  Bills  Payable  account,  if  not  in  balance  ? 

14.  Can  the  debits  of  Bills  Payable  exceed  the  credits? 

15.  When  should  a  proprietor  or  partner  be  debited,  and  when  credited  ? 

16.  When  should  Merchandise  be  debited,  and  when  credited  ? 

17.  What  kinds  of  property  are  classed  as  merchandise  ? 

18.  What  record  is  made  of  unsold  merchandise  when  we  wish  to  show  results? 

19.  What  result  may  be  shown  by  Merchandise  account  ? 

20.  When  should  Real  Estate  be  debited,  and  when  credited  ? 

21.  What  kinds  of  property  are  classed  as  real  estate  ? 

22.  What  record  is  made  of  unsold  real  estate  when  we  wish  to  show  results? 

23.  What  results  may  be  shown  by  Real  Estate  account? 

24.  When  should  Expense  be  debited,  and  when  credited  ? 

25.  Are  inventories  ever  recorded  in  Expense  account? 

26.  Wh."1    results  may  be  shown  by  Expense  account  ? 

27.  Whe.i  should  Interest  and  Discount  be  debited,  and  when  credited? 

28.  Are  inventories  ever  recorded  in  this  account? 

29.  What  results  may  be  shown  by  this  account? 

30.  When  should  Loss  and  Gain  be  debited,  and  when  credited? 

31.  May  other  titles  be  used  than  those  already  named  ? 

32.  What  are  the  Commercial  Accounts  of  the  last  business  ?  The  Financial  Accounts  ? 


Set  Two— Flour  and  Feed  Business 


In  this  set  you  will  not  handle  the  cash,  merchandise  tickets,  and  business  papers,  as  you 
are  to  keep  books  for  Mr.  J.  A.  Lane,  a  dealer  in  flour  and  feed,  who  with  his  other  employees 
will  carry  out  all  transactions  and  write  all  business  papers,  giving  you  the  historical  mem- 
oranda as  printed  below  for  entry  in  the  books. 

Preparing  Your  Blanks.  Four  books  are  required  in  this  set — journal,  cash  book,  sales 
book,  and  ledger.  If  loose  leaf  blanks  are  used,  the  student  will  place  ruled  paper  in  the 
binders  for  this  set  as  follows :  , 

Journal,  Notes,  and  Cash 

1st  Cord — 1  sheet  journal  ruling  for  Journal. 
2d    Cord — 1  sheet  journal  ruling  for  Cash  Book. 

Purchase  and  Sales 

•1st  Cord — 1  sheet  journal  ruling  for  Sales  Book. 

Ledger  and  Trial  Balances 

1st  Cord — 2  sheets  2  acct.  ledger  with  index  tip  for  Ledger. 

2d    Cord — 1  sheet  journal  ruling  for  Trial  Balances  and  Statements. 

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85— 


86  NEW  INDUCTIVE  BOOKKEEPING 

Posting.  Heretofore  you  have  been  required  to  enter  or  "post"  all  transactions  to  the 
ledger  at  the  time  they  were  entered  in  cash  book,  journal,  or  sales  book.  This  practice  was 
followed  in  order  to  impress  on  your  mind  the  great  accounting  principle  that,  for  every  debit 
there  is  a  corresponding  and  equal  credit.  In  business,  however,  bookkeepers  do  not  post 
each  transaction  to  the  ledger  at  the  time  it  is  entered  in  the  book  of  original  entry.  They 
find  it  more  convenient  to  post  the  journal,  cash  book,  etc.,  periodically  (usually  at  the  end 
of  each  day's  business).  In  this  set  you  may  postpone  the  posting  of  the  entries  to  the  ledger 
until  you  have  recorded  all  of  the  transactions  in  the  other  books. 

TRANSACTIONS 

On  Nov.  1,  19 — ,  J.  A.  Lane  engaged  in  a  Flour  and  Feed  Business  at  124  Clark  St., 
Hamilton,  111.  His  invested  resources  consist  of:  Cash  on  hand,  $821.60;  stock  of  flour 
and  hay,  grain,  etc.,  per  inventory,  $1252.85;  horse  and  dray,  scales  and  other  chattels, 
inventoried  at  $275.  He  holds  promissory  notes  amounting  to  $324.90,  which  should  be 
listed  in  the  ledger  in  separate  lines  as  follows  :  M.  L.  Snow,  $100 ;  S.  T.  Wilson,  $141.50 ; 
N.  P.  Mills,  $83.40.    R.  C.  Jackson  owes  him  on  account,  $71.40. 

Mr.  Lane's  liabilities  consist  of  outstanding  notes  amounting  to  $425.35,  listed  as  fol- 
lows:  L.  Woods,  $71.50;  Harper  Bros.,  $253.85;  E.  F.  Parker,  $100.  He  owes  Hall  & 
Miller  on  account,  $124.15,  and  T.  C.  French  a  balance  amounting  to  $81.60. 

Nov.    1.     Gave  check  to  S.  A.  Bowman  for  rent  of  store  to  Jan.  1,  next,  $90. 
"       2.     Sold  to  A.  N.  Price  for  cash,  7  tons  of  Hay  @  $15.50. 
"       2.     Sold  to  W.  T.  Davis  on  account,  12  brl.  Flour  @  $5.50. 

3.     Bought  of  Hall  &  Miller  on  account,  Mdse.  per  their  bill  of  Nov.  1,  $56.25. 
"       3.     Paid  our  note  of  Jan.  16,  favor  L.  Woods,  $71.50,  with  accrued  interest  on 
the  same,  $5.20. 

Nov.  4.  Sold  to  L.  McGuire  on  his  note  at  30  days,  2  tons  Hay  @  $15.50,  21  bu. 
Corn  @  50  cents. 

Nov.  4.  Bought  of  E.  C.  Haskell  on  account  for  use  in  store,  8  tons  Hard  Coal  @ 
$7.25. 

Nov.    5.     Paid  cash  to  A.  F.  Hart  for  interest  due  on  our  note  of  Jan.  1,  $17.60. 
"       5.     Sold  to  Hanover  &  Co.  for  cash,  75  bu.  Oats  @  40  cents. 
"       6.     Received  from  N.  P.  Mills  cash  for  interest  on  his  note  of  Nov."  6,  last  vear, 
$8.75. 

Nov.    7.     Received  from  R.  C.  Jackson  cash  on  account,  $25. 
"       8.     Paid  Harper  Bros,  cash  to  apply  on  our  note  of  July  1,  $125. 
"     10.     Sold  to  R.  C.  Jackson  on  account,  25  tons  Baled  Hay  @  $16.25. 
"     11.     Bought  of  Pope  Milling  Co.  for  cash,  a  bill  of  Flour  and  Feed  Stuff,  amount- 
ing to  $315.40. 

Nov.  12.     Received  from  M.  L.  Snow,  cash  to  apply  on  his  note  of  May  6,  $75. 
"     13.     Bought  for  cash  of  A.  P.  Marble,  an  office  safe,  billed  at  $65.      (Chattels.) 
"     13.     Paid  cash  for  telephone  rent  to  Dec.  1,  next,  $3.50. 

"     15.     Bought  of  C.  W.  Jones  &  Co.  on  our  note  at  30  days,  Mdse.  per  their  bill  of 
this  date,  $134.90. 

Nov.  16.     Sold  to  F.  M.  Bell  for  cash,  12  tons  B.  Hay  @  $16.25 ;  5  brl.  Flour  @  $4.85. 
"     16.     S.  T.  Wilson  has  paid  in  cash  his  note  of  Oct.  2,  last  year,  for  $141.50,  with 
accrued  interest,  $15.75. 

Nov.  17.     W.  T.  Davis  has  settled  his  account  to  date  by  giving  us  his  note  at  60  days 

Paid  Hall  &  Miller  cash  on  account,  $100. 

Bought  of  C.  W.  Baker  &  Co.  for  cash,  a  bill  of  Flour  amounting-  to  $192.50. 
Paid  cash  for  salary  of  clerk  to  date.  $21.25. 

Sold  to  J.  P.  Nelson  on  his  note  at  60  days,  9  tons  Baled  Hav  @  $16.25. 
Received  from  R.  C.  Jackson  cash  on  account,  $150. 
Sold  to  T.  C.  French  on  account,  7  brl.  Flour  (a),  $5.50. 
Paid  E.  C.  Haskell  cash  in  full  of  account,  $58. 

Sold  to  L.  Morgan  &  Co.  on  account,  2560  lb.  Chopped  Feed  @  ll/2  cts.,  19 
tons  Hay  @  $12.50. 


for  $66. 

Nov.  19. 

'     19. 

'     20. 

'     21. 

'     21. 

'     22. 

«    22. 

1     23. 

SET  TWO— FLOUR  AND  FEED  BUSINESS  87 

Nov.  24.  Sold  to  E.  F.  Parker,  to  be  applied  on  our  note  in  his  favor,  125  bu.  Oats  @ 
40c. 

Nov.  25.     Bought  of  T.  C.  French  on  account  15  tons  Hay  @  $10.50. 
"     25.     Received  from  L.  Morgan  &  Co.  cash  on  account,  $125. 
"     27.     Bought  of  Hall  &  Miller  on  account,  Mdse.  per  their  bill  of  Nov.  24,  $81.20. 
"     28.     Settled  our  account  with  T.  C.  French  by  handing  him  our  note  at  30  days  for 
balance  due  him,  $200.60. 

Nov.  29.  Sold  to  J.  S.  Brown  for  cash,  $25,  a  set  of  Fairbanks  scales  belonging  to  the 
store  chattels,  and  which  we  do  not  need. 

Nov.  30.     Sold  to  L.  Stetson  for  cash,  10  brl.  Gra.  Flour  @  $9.62. 
Submit  your  journal,  cash  book,  and  sales  book  for  inspection,  and  before  posting  any 
entries,   study   the   following  instructions  as  to   Grouping   Ledger   Accounts,    Postmarking 
Original  Entries,  and  Side 'Posting. 

Postmarking  Original  Entries.  On  page  31  in  the  paragraph  "Postmarking,"  we 
explained  that  the  ledger  page  is  entered  next  to  the  title  in  journal,  cash  book,  etc.,  as  a  post- 
mark indicating  that  the  entry  has  been  posted,  and  giving  the  page  of  the  ledger  where  the 
account  may  be  found. 

Accountants,  who  have  much  posting  to  do,  have  discovered  that  they  can  save  time  and 
avoid  errors  in  posting,  by  writing  all  ledger  pages  in  the  folio  column  next  to  the  entries  to 
be  posted,  before  any  entries  are  carried  to  the  ledger.  In  this  process,  the  mind  is  centered 
on  one  thing,  namely,  the  correct  ledger  page  of  each  title  that  is  to  be  posted.  After  all  pages 
have  been  entered  in  the  folio  columns  of  journal,  cash  book,  and  sales  book,  the  student  can 
make  rapid  work  of  the  posting,  and  his  mind  will  be  relieved  from  the  task  of  carrying  the 
correct  ledger  folios  back  to  the  original  books.  A  small  check  mark  should  be  made  close  to 
the  folio  number,  indicating  that  the  posting  entry  is  completed. 

Preparatory  to  posting  Set  Two,  the  student  may  open  ledger  accounts  with  J.  A.  Lane, 
Proprietor,  on  page  1,  Chattels  on  page  1,  Expense  on  page  2,  Interest  on  page  2.  Merchan- 
dise on  page  3,  Loss  and  Gain  Closing  on  page  3,  Bills  Receivable  on  page  4,  Bills  Payable 
on  page  4,  R.  C.  Jackson  on  page  5,  W.  T.  Davis  on  page  5,  Hall  &  Miller  on  page  6,  L. 
Morgan  &  Co.  on  page  6,  T.  C.  French  on  page  7,  and  F.  C.  Haskell  on  page  7. 

Do  not  fail  to  index  all  accounts  opened  in  the  ledger. 

Now,  enter  the  correct  ledger  folio  opposite  each  ledger  title  for  the  several  entries  in 
the  journal,  cash  book,  and  sales  book. 

Before  posting  any  of  the  entries,  study  carefully  the  next  two  topics,  after  which  pro- 
ceed to  post  your  books,  carrying  out  all  instructions. 

Side  Postings.  As  nearly  all  of  the  mistakes  in  accounting  occur  in  the  posting,  it 
follows  that  the  student  should  understand  all  reasonable  methods  of  testing  or  safeguarding 
his  posting  entries.  The  simplest  of  these  methods  is  the  process  termed  "Side  Posting," 
which  consists  of  carrying  to  a  loose  slip  of  paper  all  amounts  that  have  been  posted  to  the 
ledger.  If  we  post  all  journal  debits  first,  we  can  test  our  posting  by  footing  the  entries  on  the 
slip  of  paper,  to  see  that  they  agree  with  the  total  debits  in  the  journal.  In  like  manner  the 
journal  credits  can  be  posted  and  tested,  then  the  cash  book  debits  and  credits,  and  finally  the 
sales  entries.  If  each  section  of  the  ledger  is  posted  and  tested,  the  student  will  be  reasonably 
certain  of  obtaining  a  correct  trial  balance. 

Posting  Your  Books.  Post  vour  journal  first,  placing  your  journal  to  the  left,  your 
ledger  in  front  of  you,  and  a  slip  of  paper  with  ruled  columns  to  the  right.  The  first  entry, 
"Cash,"  does  not  have  a  ledger  title,  but  is  carried  to  the  cash  book,  which  is  the  account  with 
cash.  If  this  entrv  appears  in  the  cash  book,  check  the  folio  column  in  both  journal  and  cash 
book,  and  record  the  amount  of  the  entry  on  your  side  slip  under  the  heading  "Journal 
Debits."  Turn  to  your  ledger  and  post  the  debit  of  Merchandise,  also  entering  the  same 
amount  on  your  side  slip  and  checking  the  entry  in  your  journal  as  posted.  Turn  to  the 
next  page  of  your  ledger  and  post  the  debit  of  Chattels,  entering  the  same  amount  on  vour 
side  slip  and  checking  the  journal  entry.  The  form  below  illustrates  the  manner  of  check- 
ing the  items  posted. 

In  the  same  manner,  post  each  journal  debit,  being  careful  to  enter  each  amount  on  your 


88 


NEW  INDUCTIVE  BOOKKEEPING 


side  slip  exactly  as  you  enter  it  in  the  ledger.  If  you  foot  the  entries  on  your  side  slip,  the 
footing  will  show  the  amount  of  your  ledger  debits  plus  the  cash  debit  that  you  checked  in  the 
opening  entry.  This  total  should  be  $3500.20,  the  same  as  the  total  of  your  journal  debits. 
If  the  amounts  do  not  agree,  you  will  conclude  at  once  that  a  mistake  has  been  made  in  post- 
ing, and  that  the  entries  on  the  side  slip  should  be  compared  with  the  entries  in  the  journal 
to  locate  the  error. 

JOURNAL  DEBITS  POSTED  AND  CHECKED— CREDITS  NOT  POSTED 


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In  the  same  manner,  post  all  journal  credits  to  their  proper  ledger  titles,  recording  the 
amounts  in  your  side  slip  under  the  heading  "Journal  Credits."  The  footing  of  this  column 
on  your  side  slip  should  amount  to  $3500.20,  the  same  as  the  total  of  your  journal  credits. 

You  are  now  to  post  your  cash  book  debits,  omitting  the  first  item  (checked)  from  the 
journal,  also  all  checked  items  from  the  sales  book,  since  these  last  will  reach  the  credit  of  the 
Merchandise  account  when  the  sales  book  footings  are  posted.  The  total  of  these  several  cash 
sales  should  be  entered  on  your  side  slip,  however,  so  that  its  total  will  agree  with  the  cash 
book  total  after  the  posting  is  completed.    Head  your  side  slip  "Credits  from  Cash." 

Turn  to  your  ledger  and  post  the  debit  of  Interest,  entering  the  same  amount  on  your 
side  slip  and  checking  the  cash  book  entry.  In  the  same  manner,  post  each  cash  debit,  being- 
careful  to  enter  each  on  your  side  slip.  The  footing  of  this  column  of  your  side  slip  should 
amount  to  $1019.95,  the  same  as  the  total  of  your  cash  book  debits,  not  including  the  opening 
entry. 

In  the  same  manner,  post  the  cash  book  credits  to  the  debit  of  the  proper  ledger  titles  and 
carry  the  amounts  on  your  side  slip  under  the  heading  "Debits  from  Cash."  The  footing  of 
this  column  of  your  side  slip  should  be  $1064.95,  the  same  as  the  total  of  your  cash  book 
credits. 

In  posting  from  the  sales  book,  the  student  will  bear  in  mind  that  a  sale  for  cash  is 
checked  and  carried  to  the  debit  side  of  the  cash  book,  while  sales  on  account  are  carried  as 
debits  to  the  proper  ledger  accounts.  The  first  sale  to  A.  N.  Price  is  carried  to  the  cash  book 
and  does  not  appear  in  the  ledger,  but  the  amount  of  this  sale  should  be  entered  on  your  side 
slip.  The  side  slip  should  be  headed  "Debits  from  Sales."  Turn  to  the  ledger  and  debit  W. 
T.  Davis  for  the  amount  of  the  second  sale,  entering  the  amount  on  your  side  slip  and  check- 
ing the  entry  in  the  sales  book.  In  the  same  manner,  post  all  other  sales.  The  footing  of  this 
column  of  your  side  slip  should  be  $1478.35,  the  same  as  the  total  of  your  sales  book  entries, 
which  you  are  now  to  post  to  the  credit  of  Merchandise. 

By  means  of  your  side  posting,  you  have  tested  the  entries  in  your  ledger  by  sections  and 
the  careful  addition  of  the  ledger  columns  should  now  enable  you  to  prepare  a  correct  trial 
balance. 


SET  TWO— FLOUR  AND  FEED  BUSINESS 


You  are  now  to   close  your  books,   carrying  out  in  order  the  instructions  previously 

given,  referring  if  necessary  to  the  closing  of  the  Model  set,  pages  42  to  45. 
The  inventories  for  this  business  are  as  follows : 

Merchandise  unsold  $963.45 

Prepaid  rent  45.00  . 

Coal  on  hand  for  heating  office  43.50 

Present  Value  of  Chattels  299.25 

Note. — The  prepaid  rent  and  coal  on  hand  comprise  an  Expense  inventory. 

When  approved,  copy  your  statements  in  "Sales,  Purchases  and  Statements,"  and  close 
and  rule  up  the  ledger  accounts  with  J.  A.  Lane,  Investment,  Expense,  Merchandise,  Chattels, 
Interest,  and  Loss  and  Gain  Closing  Nov.  30. 

Next,  forward  the  inventories  of  Merchandise,  Chattels,  and  Expense,  and  the  pro- 
prietor's balance,  after  which  prepare  a  final  trial  balance.  See  trial  balance  after  closing, 
page  45. 

Prepare  your  books  for  inspection  as  previously  instructed.  While  waiting  for  their 
return,  prepare  yourself  to  answer  the  questions  of  the  General  Review  Quiz. 

GENERAL  REVIEW  QUIZ 

1.  What  is  an  account  ? 

2.  What    improved    methods    of    keeping   accounts    have   been    devised   by   modern 
accountants  ? 

3.  What  is  the  "Double  Entry  Principle?" 

4.  What  is  meant  by  the  term  "Journalizing?" 

5.  In  what  way  is  the  student  of  bookkeeping  benefited  by  journalizing  drills? 

6.  Name  the  two  general  classes  of  acccounts,  and  give  examples  of  each. 

7.  State  the  general  rules  for  debiting  and  crediting  property  accounts.    Illustrate  each. 

8.  State  the   general  rules   for  debiting  and  crediting  personal  accounts  and  illustrate 
each. 

9.  State  the  general  rules  for  debiting  and  crediting  loss  and  gain  accounts. 

10.  What  is  usually  included  under  the  term  "Cash  ?" 

11.  Define  and  illustrate  Bills  Payable. 

12.  Define  and  illustrate  Bills  Receivable. 

13.  Give  rules  for  debiting  and  crediting  Bills  Receivable  and  Bills  Payable. 

14.  Give  rule  for  debiting  and  crediting  the  Interest  account. 

15.  In  the  following  list  of  property,  which,  at  the  time  of  purchase,  should  be  charged 
to  Chattels,  and  which  to  Expense?  Postage  Stamps,  Lamps,  Coal  Oil,  Ink,  Lumber  (for 
boxing) ,  Brooms  and  Brushes,  Drays,  Telephones,  Fuel,  Incandescent  Lamps,  Lamp  Shades, 
Harness,  Hav  for  dray  horse,  Scissors  or  Knives  used  in  store,  Twine,  Nails,  Scales,  Office 
Books,  City  Directory,  Wrapping  Paper,  Shelving,  Dictionary,  Lubricating  Oil  for  Machin- 
ery, Typewriter  Ribbons,  Cigar  Lighter,  Ice  stored  in  ice  house  and  used  in  business  for 
refrigerators.  Copying  Books  for  letter  press,  Stoves,  Fly  Paper,  Zincs  or  other  material  for 
electric  batteries.  Bunting  for  decorations.  Soap  and  Towels  for  lavatory,  Book  Covers  or 
Binders  for  card  system,  Shipping  Tags,  Awnings.  * 

16.  What  property  is  included  under  the  term  "Real  Estate?" 

17.  For  what  are  the  real  estate  accounts  usually  debited?    For  what  credited? 

18.  Give  rule  for  debiting  and  crediting  the  General  Loss  and  Gain  account. 

19.  For  what  is  the  Proprietor's  Investment  account  debited?    For  what  credited? 

20.  For  what  is  the  Proprietor's  Personal  account  debited?    For  what  credited? 


Set  Two,  Supplementary— Wood  and  Coal  Business 

This  set  requires  the  same  kind  of  books  and  accounting  methods  as  those  used  in  Set 
Two,  and  the  following  transactions  are  introduced  to  reinforce  the  work  of  the  preceding 
set. 

Preparing  Your   Blanks.      If    loose    leaf  blanks  are  used,  the  student  will  place  ruled 
paper  in  the  binders  for  this  set,  as  follows : 
Journal,  Notes,  and  Cash 

1st  Cord — 1  sheet  journal  ruling  for  Journal. 
•2d    Cord — 1  sheet  journal  ruling  for  Cash  Book. 

Purchase  and  Sales 

1st  Cord — 1  sheet  journal  ruling  for  Sales  Book. 

Ledger  and  Trial  Balances 

1st  Cord — 2  sheets  2  acct.  ledger  with  index  tip  for  Ledger. 

2d    Cord — 1  sheet  journal  ruling  for  Trial  Balances  and  Statements. 

In  this  business  the  student  will  act  as  bookkeeper  for  J.  L.  Hammond,  a  dealer  in  wood 
and  coal.  He  will  write  up  the  entire  set  in  the  original  books,  but  will  post  no  entries  to  the 
ledger  until  directed  to  do  so  later  in  the  text. 

TRANSACTIONS 
OPENING  STATEMENT 

Dec.  1.  Retail  Wood  and  Coal  Business  conducted  by  J.  L.  Hammond,  at  54  Main 
Street,  Auburn,  Ohio.  Invested  Resources: — Cash  per  balance  in  City  Bank,  $1500.  Mdse. 
inventory  of  Coal  and  Wood  in  yard,  $745.50.  Teams,  office  fixtures  and  other  property  as 
inventoried  under  chattels,  $425.  Bills  Receivable,  notes  on  hand,  $342.60,  listed  as  follows : 
A.  P.  Lowe,  $80;  Charles  Ranger,  $92.10;  H.  I.  Carman,  $170.50. 

H.  S.  Chase,  balance  on  account,  $52.20. 

Liabilities: — Bills  Payable,  proprietor's  outstanding  notes,  $241.50,  listed  as  follows :  A. 
P.  Johnson,  $50;  J.  L.  Holmes,  $125;  G.  C.  Miller,  $66.50. 

Dec.    2.     Handed  A.  G.  Miller  my  check  for  office  rent  to  Jan.  1,  $25. 

Received  a  car  of  Coal  from  Western  Coal  Co.,  per  their  bill  of  Dec.  1,  at  30 

Paid  cash  for  freight  on  coal  shipment  from  Western  Coal  Co.,  $17.50. 

Sold  to  L.  M.  Farnsworth  on  account,  6  tons  Hocking  @  $3.75. 

Cash  sales  of  Coal  and  Wood  to  date,  $85.90.     (See  entry  No.  7,  Model  Sales 

) 

Sold  to  Thos.  Lynch,  at  30  days,  16  tons  nut  coal  @  $5.50. 

Received  from  H.  S.  Chase  cash  on  account,  $25. 

Paid  to  C.  A.  Jarvis  for  first  quarter's  rent  of  coal  yard,  $150. 

Cash  sales  of  Mdse.  to  date,  $148.90. 

Handed  A.  P.  Johnson  my  check  for  $50  in  payment  of  my  note  of  May  1. 

Sold  to  C.  B.  Daniels  on  account,  5^  tons  Coke  @  $7.80. 

Received  a  carload  of  Scranton  coal  from  A.  Burnett  &  Sons,  Pittsburg,  Pa., 
billed  Dec.  5,  at  60  days,  for  $179.60. 

Dec.  10.     Paid  cash  for  freight  on  coal  shipment  of  A.  Burnett  &  Sons,  $27.40. 
"     11.     Cash  sales  to  date^  $172.45. 
"     12.     Sold  to  H.  S.  Chase  on  account,  iy2  cords  4-foot  Hickory  @  $4.75. 

Note. — When  the  amounts  involve  fractions  of  a  cent  less  than  y2,  the  fraction  is  dropped.  When 
the  fraction  is  %  or  more  it  is  considered  one  cent,  thus,  $7.91  %  would  be  entered  $7.91;  $7.91^  would  be 
entered  $1.92.     This  rule  does  not  apply  to  prices,  but  to  amounts  only. 

Dec.  13.  Bought  of  L.  T.  Jones  on  my  note  at  90  davs,  50  cords  oak  stove  wood  @ 
$1.45. 

Dec.  14.  Received  from  A.  P.  Lowe,  cash  for  his  note  of  June  18,  $80,  with  six 
months'  interest  at  6  per  cent. 

—90— 


tt 

3. 

days 

;,  $146.50. 

Dec. 

3. 

it 

4. 

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4. 

Book,  page  58 

Dec. 

5. 

tt 

5. 

tt 

6. 

tt 

7. 

it 

9. 

tt 

9. 

tt 

10. 

SET  TWO,  SUPPLEMENTARY— WOOD  AND  COAL  BUSINESS  , 


91 


Dec.  14.     Handed  my  check  to  the  Eagle  Mining  Co.  in  payment  for  coal  delivered  in 
yard  per  bill  of  this  date,  $249.60. 

Dec.  15.     Sold  to  A.  P.  Cooper  on  his  note  at  60  days,  9  tons  Nut  Coal  @  $5.50,  8  cds. 
4-foot  Hickory  @  $4.75. 

Dec.  15.     Cash  sales  to  date,  $158.75. 
"     16.     Gave  check  for  $154.20  to  Hocking  Valley  Coal  Co.  in  payment  of  carload  of 
coal  received  this  day. 

Dec.  16.     Paid  cash  for  freight  on  above  coal,  $11.25. 
"     18.     Sold  to  Thos.  Lynch  on  account,  9  tons  Coke  @  $7.80,  receiving  his  check 
for  $50  to  apply  on  sale,  balance  on  account. 

Dec.  19.     Paid  J.  L.  Holmes  cash  for  my  note  of  Sept.  20,  $125,  with  90  days'  interest 
at  6  per  cent. 

Dec.  19.     Cash  sales  to  date,  $215.25. 
"     20.     Bought  for  cash  of  Central  Hardware  Co.,  a  set  of  platform  scales  for  use  in 
coal  yard,  $22.75. 

Dec.  20.     Bought  of  the  Eagle  Mining  Co.,  3  carloads  of  steam  coal,  cost  as  billed, 
$269.50.     Gave  them  cash  to  apply,  $100.     Balance  at  30  days. 

Enter  whole  amount  of  bill  in  journal  and  charge  Eagle  Mining  Co.,  in  cash  book,  for  the  amount 
of  the  payment. 

Dec.  21.     Sold  to  C.  B.  Daniels  on  account,  7  tons  Hocking  @  $3.90. 
"     22.     L.  M.  Farnsworth  gave  us  his  check  for  $15  to  apply  on  account. 
"     22.     H.  S.  Chase  has  settled  his  account  to  date  by  giving  his  note  at  30  days  for 
$62.83. 

Dec.  23.     Remitted  to  A.  Burnett    &    Sons,  Pittsburg,  N.  Y.,  cash  per  draft,  $125,  to 
apply  on  account. 

'Dec.  23.     Paid  cash  for  teamster's  salary  to  date,  $56.25. 

"     24.     Sold  to  C.  B.  Daniels,  12  tons  Pocahontas  @  $7.60.    He  hands  us  his  check 
for  $60  to  apply  on  sale. 

In  this  transaction,  we  charge  Mr.   Daniels  with  the  whole  amount  of  the  sale  in  the 
sales  book,  then  credit  him  in  the  cash  book  for  the  payment.     Following  are  the  forms  of 

entry: 

SALES  BOOK  ENTRY 


CASH  BOOK  ENTRY 


Dec.  24.     Loaned  F.  T.  Beach  cash  $250,  for  which  he  has  given  his  note  at  60  days. 
"     24.     Cash  sales  to  date,  $227.40. 

"     26.     Chas.  Ranger  has  given  us  his  check  in  payment  of  his  note  of  Oct.  27,  for 
$92.10,  with  60  days'  interest  at  8  per  cent. 

Dec.  26.     Paid  Harper  &  Sons  cash  for  office  stationery,  per  bill  rendered,  $7.40. 
"     26.     Settled  our  account  with  the  Eagle  Mining  Co.  to  date  by  giving  them  our 
note  at  60  days. 

Dec.  27.     Sold  to  H.  S.  Chase  on  account,  17  tons  Lehigh  Val.  Coal  @  $4.90. 
"     27.     Bought  of  the  Eagle  Mining  Co.  at  30  days,  2  carloads  Pocahontas,  per  bill  of 
Dec.  24,  $257.60. 

Dec.  28.     Received  from  G.  C.  Miller,  cash  for  overdue  interest  on  his  note  of  Jan.  1, 
$7.55. 

Dec.  28.     Bought  of  Western  Coal  Co.,  3  carloads  Hocking  Valley,  per  their  bill  of 
Dec.  27,  $273.50.    Gave  them  our  check  for  $150  to  apply  on  bill. 


92  NEW  INDUCTIVE  BOOKKEEPING 

Dec.  29.  Bought  of  the  Martin  Implement  Co.  on  our  note  at  30  days,  coal  wagon  for 
our  delivery  department,  $145. 

Dec.  30.     Paid  in  cash,  Daily  Journal  advertising  bill,  $15.25. 

"     30.     Handed  the  Eagle  Mining  Co.  our  check  for  $175  to  apply  on  account. 

"     31.     Cash  sales  to  date,  $325.90. 
Balance  your  cash  and  foot  your  journal  and  sales  book. 
Before  beginning  to  post  your  books,  carefully  study-  the  following  instructions : 

.  Safe-Guard  Systems.  These  comprise  various  devices  used  by  accountants  for  testing 
the  accuracy  of  ledger  postings.  The  sideposting  exemplified  in  the  previous  set  is  one  of 
them.  Other  systems  are  based  on  the  so-called  "check-number,"  or  the  number  that  remains 
after  dividing  a  given  number  by  another  number,,  as  9,  11,  13,  etc.  There  are  several  check- 
number  systems,  but  the  "Check-Eleven  System"  is  the  one  most  favored  by  accountants, 
and  will  be  used  in  this  set. 

In  the  Check-Eleven  System,  the  check  number  is  the  number  that  remains  after  dividing 
a  number  by  11.  Thus,  the  check  number  of  25  is  3,  since  3  remains  when  we  divide  25  by 
11.  In  like  manner,  the  check  number  of  37  is  4,  while  the  check  number  of  60  is  5,  of  117 
is  7,  and  so  on. 

By  the  application  of  certain  arithmetical  principles,  the  check  number  may  be  obtained 
more  easily  than  by  dividing  the  whole  number  by  11.  These  principles  may  be  stated  as 
follows : 

1.  A  number  is  exactly  divisible  by  11  when  the  sum  of  its  odd  digits  equals  the  sum  of 
its  even  digits. 

Note. — By  "odd  digits"  we  mean  the  units,  hunreds,  ten-thousands,  millions,  etc.  The  "even  digits" 
are  the  tens,  thousands,  hundred-thousands,  etc.  Thus,  in  the  number  8264579,  the  "odd  digits"  are  9,  5, 
6,  and  8  (the  1st,  3rd,  5th,  and  7th  orders),  while  the  "even  digits"  are  7,  4,  and  2,  (the  2nd,  4th,  and  6th 
orders). 

For  illustration,  the  number  351296  is  exactly  divisible  by  11,  because  the  sum  of  its  odd  digits  (6  + 
2  +  5  =  13)  equals  the  sum  of  its  even  digits  (9  +  1  +  3  =  13). 

2.  The  sum  of  the  odd  digits  less  the  sum  of  the  even  digits  equals  the  check  number 
or  the  remainder  obtained  by  dividing  the  whole  number  by  11. 

Thus,  in  the  number  123456,  the  sum  of  the  odd  digits  is  12,  while  the  sum  of  the  even 
digits  is  9.  The  check  number,  therefore,  is  3.  (123456  -+- 11  =  11223  and  a  remainder 
of  3.) 

3.  When  the  sum  of  the  even  digits  is  greater  than  the  sum  of  the  odd  digits,  add  11  to 
the  sum  of  the  odd  digits  (or  subtract  11  from  the  sum  of  the  even  digits)  before  subtracting 
to  get  the  check  number. 

Thus,  in  the  number  654321,  the  sum  of  the  odd  digits  is  9,  while  the  sum  of  the  even 
digits  is  12 ;  to  get  the  check  number  we  may  add  11  to  9,  obtaining  20 ;  then  20  —  12  =  8, 
the  check  number,  or  we  may  subtract  11  from  12,  obtaining  1 ;  then  9  — 1  =  8,  the  check 
number. 

Note. — If  after  subtracting  the  sum  of  the  even  digits  from  the  sum  of  the  odd  digits  the  re- 
mainder is  greater  than  11,  the  check  number  Is  found  by  subtracting  11  from  this  remainder.  Thus,  in 
the  number  171348,  the  sum  of  the  odd  digits  is  18,  and  the  sum"  of  the  even  digits  is  6.  18  —  6  =  12  —11 
=  1,  the  check  number. 

EXERCISE 

Find  the  check  number  for  each  of  the  following  amounts : 

$    .35                       $  25.90                       $172.19  $211.10 

.76                         123.50                           63.40         .  304.23 

1.21                         327.54                           21.00  192.83 

6.54                         128.76                           50.07  641.17 

12.40                         321.15                         500.05  370.20 

Casting  out  the  ll's.  In  the  case  of  larger  numbers,  the  same  results  may  be  secured 
and  the  process  considerably  shortened  by  dropping  or  "casting  out  the  ll's"  during  the  pro- 
cess of  adding.  Thus,  the  check  number  for  48769538  is  4.  Instead  of  adding  all  four  of  the 
odd  digits  in  the  usual  way,  we  proceed  as  follows  :  8  -f-  5  =  13  —  11  =  2  +  6  +  8  =  16 
—  11  =  5.    Then,  dealing  in  the  same  way  with  the  even  digits,  we  have,  3  +  9  =  12  —  11 


SET  TWO,  SUPPLEMENTARY— WOOD  AND  COAL  BUSINESS 


93 


=  1  +  7  +4  =  12  —  11  =  1.  Then  5,  the  resultant  of  the  odd  digits,  less  1  =  4,  the  check 
number.  Again,  the  check  number  of  996761  is  7,  found  as  follows :  1  — (-  7  -j-  9  =  17 ;  6  -f- 
6  =  12  —  11  =  1  +  9  =  10.     17  —  10  =  7,  the  check  number. 

EXERCISE 

Using  the  process  illustrated  in  the  previous  paragraph,  find  the  check  numbers  of  the 
following  amounts : 

$9876.59  $47698.37  $96875.97 

8769.78  98765.87  87968.75 

4796.58  86597.48  68975.98 

Note. — Some  bookkeepers  prefer  to  get  the  check-number  by  the  method  of  the  totals,  without  cast- 
ing out  the  ll's.  Others  prefer  the  latter  method.  In  your  subsequent  work  you  may  use  your  own  pref- 
erence as  to  these  two  methods. 

Application  of  the  System.  The  value  of  the  check-eleven  safeguard  system  in  ac- 
counting depends  upon  the  following  principle: 

In  any  column  of  figures,  the  check-numbers  of  the  several  amounts  will,  when  added, 
give  the  same  check-number  as  the  footing  of  the  column. 

The  accompanying  form  shows  a  balanced  opening  entry  the  posting  of  which  has  been 
tested  by  applying  the  foregoing  principle.  The  check-numbers  of  the  several  amounts,  after 
each  has  been  posted  to  the  ledger,  are  entered  in  "check  columns"  ruled  for  the  purpose.  The 
check-numbers  are  then  added  (the  ll's  being  "cast  out,"  as  previously  explained).  As 
the  two  check  columns  give  the  same  check-number,  10,  and  as  this  agrees  with  the  check- 
number  of  the  general  footing,  the  posting  is  assumed  to  be  correct. 

AN  OPENING  JOURNAL  ENTRY  WITH  CHECK  FIGURES 


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The  student  should  bear  in  mind  that  the  purpose  of  the  safeguard  system  is  to  prove 
that  the  right  postings  have  been  made  in  the  ledger,  also,  that  to  secure  this  end,  the  check- 
numbers  must  be  obtained  not  from  the  amounts  as  entered  in  the  journal  or  other  book  of 
original  entry,  but  from  the  amounts  as  actually  entered  in  the  ledger.  The  check-numbers 
thus  obtained  are  then  entered  opposite  the  posted  amount  in  the  journal,  and  serve  as  a  post- 
mark instead  of  the  check-mark  ( V  )  used  in  the  last  set.  The  check-mark  is  then  unneces- 
sary, as  the  check-number  not  only  shows  that  the  amount  has  been  posted,  but  (through  the 
final  test  when  the  column  is  proved)  it  shows  that  it  has  been  posted  correctly. 


94  NEW  INDUCTIVE  BOOKKEEPING 

Note. — It  should  be  observed  that  the  check-eleven  system  will  not  show  a  posting  error  in  any  case 
where  the  totals  of  the  odd  and  even  digits  remain  unchanged.  Thus,  if  the  amount  735.62  is  posted 
732.65,  the  error  will  not  appear,  as  this  transposition  does  not  affect  the  totals  of  the  odd  or  the  even 
digits,  and  the  check-number,  5,  remains  the  same  in  both  amounts.  Transpositions  of  this  kind  are,  how- 
ever, very  unusual.  But  if,  as  is  more  likely  to  happen,  an  even  digit  and  an  odd  one  are  transposed, 
the  error  will  be  shown.  For  instance,  if  7.65  be  posted  6.75,  the  check-number  of  the  incorrect  entry 
will  differ  from  that  of  the  correct  one. 

As  to  the  practical  value  of  this  safeguard  system  to  the  student,  it  may  be  observed : 

(1)  The  use  of  the  system  is  required  in  many  counting  rooms  and  business  offices. 

(2)  It  will  enable  the  student  to  avoid  incorrect  trial  balances  in  his  own  work,  as 
these  usually  result  from  wrong  postings. 

(3)  It  affords  most  valuable  mental  drill  in  the  manipulation  of  numbers. 

As  your  books  are  not  provided  with  "check  columns,"  the  check-numbers  are  to  be 
entered  in  small  figures  to  the  left,  near  the  double  ruling  and  a  little  above  the  amounts,  to 
indicate  that  the  check-numbers  are  not  a  part  of  the  amounts. 

You  are  now  to  post  your  books  of  original  entry,  carefully  following  your  instructions. 

Use  the  check-eleven  safeguard  system  for  all  postings  in  this  exercise  unless  otherwise 
instructed  by  your  teacher.  Be  sure  to  get  the  check-number  from  the  amount  posted  in  the 
Jedger,  not  from  the  amount  as  entered  in  journal,  cash  book,  or  sales  book. 

Ledger  Folios.  Before  posting  any  book,  enter  the  ledger  folios  opposite  all  entries,  as 
instructed  in  the  previous  business.  As  you  are  to  use  the  check-eleven  safeguard,  you  will, 
of  course,  not  use  the  side  posting  employed  in  the  previous  business.  After  posting  the 
journal,  prove  the  correctness  of  your  journal  postings  by  the  check-numbers,  as  shown  in  the 
form  on  page  93,  before  proceeding  to  post  the  cash  book.  Prove  the  latter  book  in  the  same 
way  as  the  journal,  then  the  sales  book.  This  proof  of  the  ledger,  a  section  at  a  time,  goes 
far  toward  assuring  a  correct  trial  balance. 

In  the  case  of  sales  for  cash,  the  check-numbers  should  be  entered  for  these  amounts  in  both  sales 
book  and  cash  book. 

It  is  believed  that  a  careful  study  of  the  foregoing  instructions  will  enable  the  student  to 
safeguard  his  postings  in  the  present  set,  but  as  an  additional  aid  we  will  give  here  the  check- 
numbers  of  the  journal,  cash  book,  and  sales  book  totals. 

Journal  debits  and  credits  each,  check-number,  5. 

Cash  Book  credits,  check-number,  1. 

Cash  Book  debits,  check-number,  1. 

Sales  Book  total,  check-number,  10. 

Note. — The  fact  that  the  check-numbers  on  the  two  sides  of  the  cash  book  are  alike  is,  of  course,  a 
mere  coincidence,  as  the  debit  total  $1667.83,  happens  to  be  a  number  that  has  the  same  check-number  (1) 
as  the  credit  total,  $1713.48. 

Do  not  omit  to  post  your  sales  book  total  to  the  credit  of  Merchandise.  As  soon  as  you 
have  completed  your  posting,  pass  your  journal,  cash  book,  and  sales  book  to  the  teacher  for 
inspection. 

When  your  postings  have  been  proved,  (1)  prepare  a  trial  balance;  (2)  prepare  a  state- 
ment of  resources  and  liabilities  and  of  losses  and  gains,  taking  into  account  inventories  of 
Chattels  $230,  Expense  $102.50,  and  Merchandise  $250.25;  (3)  close  the  books  as  in  pre- 
vious business. 

Prepare  your  books  for  inspection  and  submit  them  to  your  teacher  for  approval  as 
heretofore. 


Set  Three — Produce  and  Provision  Business 

In  this  set  the  student  will  act  as  bookkeeper  for  a  partnership  firm,  using  the  journal, 
cash  book,  and  sales  book  for  original  entries  the  same  as  in  the  preceding  set.  The  student 
should  post  no  entries  to  the  ledger  until  instructed  to  do  so  later  in  the  text. 

Preparing  Your   Blanks.      If    loose    leaf  blanks  are  used,  the  student  will  place  ruled 
paper  in  the  binders  for  this  set,  as  follows : 
Journal,  Notes,  and  Cash 

1st  Cord — 1  sheet  journal  ruling  for  Journal. 
2d    Cord — 2  sheets  journal  ruling  for  Cash  Book. 
Purchase  and  Sales 

1st  Cord — 2  sheets  journal  ruling  for  Sales  Book. 

Ledger  and  Trial  Balances 

1st  Cord — 3  sheets  2  acct.  ledger  with  index  tip  for  Ledger. 

2d    Cord — 1  sheet  journal  ruling  for  Trial  Balances  and  Statements. 

In  this  business  only  one  ledger  account  will  be  required  for  each  partner.  This  account 
will  contain  all  of  his  debits  and  credits  without  making  any  distinction  between  investment 
and  personal  debits  and  credits. 

Unless  otherwise  instructed  by  your  teacher,  you  will  use  the  check-eleven  safeguard  as 
in  the  previous  business. 

This  business  begins  with  a  schedule  of  the  resources  and  liabilities  as  invested  by  the  two 
partners.  The  form  of  opening  entry  shown  on  page  96,  with  the  exception  of  date,  amounts, 
and  check  numbers,  is  identical  with  the  required  entry.  The  form  shows  the  entry  as  it  would 
appear  after  being  posted  and  proved. 

Note. — In  the  case  of  an  opening  entry  involving  a  number  of  amounts,  it  is  well  to  post  to  the 
ledger  and  prove  as  soon  as  the  books  are  opened. 

Entering  Amounts  of  Notes.  In  a  business  where  a  great  many  notes  are  handled,  a 
special  registry  book  called  a  Bill  Book  is  kept  for  the  purpose  of  listing  all  notes.  When  there 
are  but  a  few  notes,  a  bill  book  is  unnecessary,  but  it  is  well  to  list  in  the  journal  the  notes  on 
hand  and  outstanding  when  the  books  are  opened.  This  is  done  in  the  model  opening  for  this 
set. 

The  accounts  in  this  set  are  to  be  paged  as  follows :  C.  F.  Roberts,  Partner,  page  1 ; 
George  H.  Adams,  Partner,  1 ;  Chattels,  2 ;  Expense,  2 ;  Interest,  3 ;  Merchandise,  3 ;  Loss 
and  Gain,  Closing,  4 ;  Bills  Receivable,  5 ;  Bills  Pavable,  5 ;  A.  N.  Davis,  6 ;  Charles  Daniels, 
6;  Randall  &  Sons,  7;  Western  Milling  Co.,  7;  f.  W.  McLean,  8;  S.  B.  Potter,  8;  Central 
Produce  Co.,  9;  L.  Matthews,  9. 

TRANSACTIONS 

Jan.  2,  19 — .     Conditions  of  partnership  and  schedule  of  investment : 

C.  F.  Roberts  and  George  H.  Adams  have  this  day  formed  a  partnership  for  continuing 
the  business  of  C.  F.  Roberts,  under  the  firm  name  of  Roberts  &  Adams,  at  No.  29  Market 
Street,  Lincoln,  Neb.    They  are  to  invest  equally  and  share  equally  in  gains  and  losses. 

C.  F.  Roberts  invests  cash,  $127.95;  a  stock  of  merchandise  inventoried  at  $1,485.25; 
safe,  scales  and  store  fixtures  (classed  as  chattels)  inventoried  at  $359.75;  notes  receivable 
amounting  to  $456.25,  listed  as  follows:  L.  T.Upson,  $174.60,  Charles  Hall,  $128.50,  Geo. 
Harmer,  $29,  C.  A.  Winter,  $124.15 ;  accrued  interest  on  notes  receivable,  $11.75 ;  balance  due 
from  A.  N.  Davis  on  account,  $64.50;  balance  due  from  Charles  Daniels  on  account,  $95.15. 
The  firm  assumes  the  following  liabilities  for  C.  F.  Roberts :  Notes  outstanding  signed  by  G 
F.  Roberts,  $342.50,  listed  as  follows :  H.  Walker,  $87.40,  C.  M.  Bell,  $100,  A.  P.  Hall, 
$105.10,  E.  C.  Mallory,  $50 ;  accrued  interest  on  notes  outstanding,  $12.50 ;  balance  due  Ran- 
dall &  Sons  on  account,  $245.60. 

George  H.  Adams  invests  a  delivery  wagon  and  team  (classed  as  chattels),  inventoried  at 
$325,  and  cash  $1,675. 

—95— 


96 


NEW  INDUCTIVE  BOOKKEEPING 


Jan,   2.     Paid  Seymour  &  Co.  cash  for  an  invoice  of  Butter  and  Eggs,  $41.90. 

"     2.     Paid  cash  for  store  rent  to  April  1,  $180. 

"     3.     Sold  to  A.  N.  Davis  on  account  at  30  days : 

15  brl.  Snowflake  Flour  @  $5.50 

25  doz.  Eggs  @       .28 

MODEL  OPENING  ENTRY— PARTNERSHIP— WITH  CHECK  FIGURES 


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SET  THREE— PRODUCE  AND  PROVISION  BUSINESS 


97 


Jan. 


Jan. 


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Jan.  3.     L.  T.  Upson  has  paid  cash  to  apply  on  his  note,  $50. 
"     4.     Sold  to  C.  S.  Hamlin  for  cash: 

25  bu.  Potatoes  @  $  .65 

12  brl.  N.  Y.  Apples  @     3.75 

30  sk.  Buckwheat  Flour  @       .45 

Paid  Madison  Coal  Co.  cash  for  coal  for  store  use,  7  tons  @  $5.75. 
Sold  to  H.  F.  Jones  on  his  note  at  30  days : 

20  brl.  Pork  @  $13.50 

152  lb.  Butter  @         .20 

Paid  cash  for  purchases  of  produce  to  date,  as  per  purchase  tickets,  $241.60. 
Mr.  Roberts'  note  for  $87.40  in  favor  of  H.  Walker  has  been  paid  in  cash,  with 
interest  to  date,  $7.25.    Under  the  partnership  agreement,  this  note  is  a  liability  of  the  firm. 
Jan.  6.     Sold  to  T.  W.  McLean : 

12  cs.  Eggs  @  $2.70 

275  lb.  Lard  @       .08^ 

He  has  paid  us  cash  to  apply  on  sale,  $20.     Balance  at  30  days.     See  first  transaction 
for  Dec.  24,  in  preceding  business. 

Jan.  6.     Petty  cash  sales  to  date,  $61.50. 
"     7.     Bought  of  the  Western  Milling  Co.,  on  account  at  30  days,  an  invoice  of  bread- 
stuffs  per  their  bill  of  Jan.  4,  amounting  to  $395.20. 
Paid  cash  for  freight  on  this  bill,  $11.75. 

(Charge  the  freight  to  Mdse.  in  the  cash  book  as  heretofore.) 
Jan.  7.     Sold  to  Chas.  Daniels  on  account  at  10  days : 

628  lb.  Bacon  @  $  .14 

75  bu.  Potatoes  @       .60 

15  bu.  Onions  @       .90 

Jan.  9.     C.  A.  Martin  has  presented  the  following  letter  from  Randall  &  Sons,  and  we 
have  paid  the  cash  as  requested : 

Lincoln,  Neb.,  Jan.  8,  19 — . 
Roberts  &  Adams, 

56  North  St.,  City. 
Dear  Sirs: — If  convenient  kindly  pay  to  the  bearer,   Mr.   C.  A.   Martin,   Twenty-five 
dollars  ($25.00)  and  charge  the  same  to  our  account. 

Randall  &  Sons, 

Per  J.  E.  R. 
Make  the  following  entry  for  Randall  &  Sons'  order  on  the  credit  side  of  the  cash  book,  "Randall 
&  Sons,  order  favor  C.  A.  Martin,  $25." 

Jan.  9.     Cash  purchases  of  produce  today,  $128.75. 
"     9.     Received  of  Chas.  Daniels  cash  on  account,  $75. 

"     9.     Paid  cash  for  our  note  of  Oct.  10,  in  favor  of  C.  M.  Bell,  $100,  with  90  days' 
accrued  interest  at  6  per  cent.     Two  entries  on  credit  side  of  cash  book. 
Jan.  10.     Sold  to  H.  F.  Miller  for  cash : 

45  bu.  Wh.  Beans  @  $2.00 

16  brl.  Snowflake  Flour  @     5.50 

Remitted  to  Western  Milling  Co.,  cash  on  account,  $150. 

Jan.  10.     A.  N.  Davis  has  settled  his  account  to  date  bv  handing  us  a  check  for  $100 
and  his  note  at  60  days  for  balance. 


COMPOUND  JOURNAL  ENTRY 


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Jan.  10.     Petty  cash  sales  today,  $71.90. 
V     10.     M.  F.  Carter  presents  an  order  from  S.  B.  Potter  requesting  us  to  sell  Mr. 
Carter  Mdse.  to  the  amount  of  $85  and  charge  the  same  to  his  (Mr.  Potter's)  account.     On 
this  order  Mr.  Carter  buys  the  following  goods : 

5  brl.  Snowflake  Flour  @  $5.60 

300  lb,  Dairy  Butter  @       .19 

Enter  in  the  sales  book  as  follows  : 


A  SALE  ON  ORDER  FROM  THIRD  PARTY 


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When  the  sales  book  is  posted,  this  order  will,  of  course,  be  posted  to  Mr.  Potter's  account.    A  check 
mark  is  entered  opposite  the  name  of  Mr.  Carter.    Why? 

Jan.  11.     Cash  purchases  of  produce  today,  $181.72. 

"     11.     Chas.  Hall  has  given  us  a  check  to  apply  on  his  note,  $128.50. 

"     12.     Paid  Robins  Bros,  cash  for  set  of  harness  for  delivery  team,  $37.50. 

"     12.     Bought  of  Geo.  Harmer  38  bu.  Potatoes  @  50  cents,  the  amount  to  be  applied 

as  a  payment  on  his  note  of  Sept.  1. 

Jan.  12.     Geo.  H.  Adams  has  had  delivered  to  him  at  his  residence,  1  brl.  A  Sugar,  296 

lb.,  @  6l/2c;  2  brl.  Apples  @  $3.25;  5  bu.  Potatoes  @  65c. 

Enter  in  sales  book  and  debit  Geo.  H.  Adams  when  you  post. 

Jan.  12.     T.  W.  McLean,  one  of  our  customers,    orders    25    sk.    Richland  Buckwheat 
Flour.    As  we  do  not  have  this  brand,  and  as  it  is  sold  by  S.  B.  Potter,  we  have  given  Mr. 
McLean  the  following  order  for  the  goods: 
Mr.  S.  B.  Potter, 
City. 
Dear  Sir : — Kindly  deliver  to  the  bearer,  Mr.  T.  W.  McLean,  25  sk.  Richland  Bk.  Flour 
at  the  current  price,  75  cents  per  sk.,  and  charge  the  same  to  our  account. 

Roberts  &  Adams. 
Decide  what  journal  entry  should  be  made  in  this  case.    Having  decided,  write  the  entry 
in  a  piece  of  practice  paper,  submit  it  to  your  teacher,  and  if  approved,  record  in  your  journal. 
Jan.  13.     Sold  to  A.  W.  Monroe  on  his  note  at  60  days : 

15  brl.  Pork  @  $14.00 

25  brl.  Snowflake  Flour  @       5.40 

Jan.  13.     C.  F.  Roberts  withdraws  cash  on  account,  $25. 
"     13.     Bought  of  the  Central  Produce  Co.    on    account,    Mdse.    per   bill    rendered 
Jan.  10,  $274.40. 

Jan.  13.     Paid  office  salaries  in  cash  to  date,  $61.50. 

13.     Bought  of  the  Chicago  Safe  Co.,  an  office  safe    for   use    in    business,  $185. 
Gave  them  check  for  $100  and  the  firm's  note  at  30  days  for  the  remainder. 

(Journalize  this  transaction  on  a  piece  of  practice  paper  and  submit  to  your  teacher  for 
approval  before  entering  in  the  journal.) 


SET  THREE— PRODUCE  AND  PROVISION  BUSINESS  99 

Jan.  13.     Paid  cash  for  freight  on  safe,  $21.60. 

(As  this  freight  charge  is  really  a  part  of  the  cost  of  the  safe  it  should  be  charged  to 
Chattels.) 

Jan.  14.  The  Hamilton  Tribune  presents  bill  for  advertising  to  date,  which  is  paid  in 
cash,  $12. 

Jan.  14.  C.  F.  Roberts'  note  (one  of  the  Bills  Payable  assumed  by  the  firm)  in  favor 
of  A.  P.  Hall,  for  $105.10  with  accrued  interest,  $6.15,  has  been  paid  to  Mr.  Hall  in  cash. 

Jan.  14.     Sold  to  A.  N.  Davis: 

24  bu.  Wh.  Beans  @  $2.10 
5  brl.  Apples  @     3.40 

50  bu.  Potatoes  @       .55 

He  has  given  us  his  check  for  $40  to  apply  on  sale. 

Jan.  14.     Petty  cash  sales  today,  $94.45. 

Geo.   H.  Adams  draws  cash  on  personal  account,  $50. 

Sold  to  L.  Matthews,  50  bu.  Potatoes  @  70c ;  25  brl.  Acme  Flour  @  $5.40 ; 
@  $2.75,  on  account. 

Sold  our  old  office  safe  to  Chas.  Daniels  on  account  for  $75. 

Sold  to  T.  W.  McLean  on  account : 

16  brl.  Sn.  Flour  @  $5.75 

10  cs.  Eggs  .  @     2.65 

Bought  of  Hall,  Davis  &  Co.,  on  our  note  at  60  days,  Mdse.  per  bill  of  Jan. 

Paid  cash  for  freight  on  above  bill,  $18.70. 

A  note  signed  by  Geo.  H.  Adams,  in  favor  of  L.  Moore,  for  $560  with  ac- 
crued interest,  amounting  to  $17.40,  has  been  paid  in  cash  by  the  firm. 
Charge  these  items  to  Adams'  account  in  the  cash  book  in  one  entry. 

Jan.  16.  C.  F.  Roberts  purchases  on  his  personal  account,  1  brl.  Apples  @  $3.50;  5  bu. 
Potatoes  @  65c;  50  lb.  Sugar  @  5^c. 

Jan.  16.  L.  T.  Upson  hands  us  his  check  to  pay  balance  of  his  note,  $124.60,  and  ac- 
crued interest,  $17.50. 

Jan.  17.     Sold  to  S.  B.  Potter  on  account : 

25  brl.  Pork  @  $14.00 
60  bu.  Potatoes  @         .60 

Jan.  17.     T.  W.  McLean  has  given  us  his  check  for  $75  to  apply  on  account. 

Jan.  17.  S.  R.  Day,  proprietor  of  the  Hamilton  Tribune,  has  presented  advertising  bill 
to  date  amounting  to  $32.75.  It  has  been  arranged  to  pay  this  bill  by  giving  him  an  order  for 
merchandise  on  Chas.  Daniels.    Give  careful  thought  to  this  transaction  before  journalizing. 

Jan.  17.  Remitted  to  the  Western  Milling  Co.  on  account,  cash  per  Chicago  draft, 
$100. 

(Bank  drafts  are  designated  by  the  name  of  the  city  where  they  are  payable,  as  "Chicago 
drafts;"  "N.  Y.  drafts,"  etc.    They  are,  of  course,  treated  as  cash.) 

Jan.  17.     Petty  cash  sales  today,  $113.35. 

Jan.  18.     Sold  to  C.  S.  Munson : 

20  brl.  Sn.  Flour  @  $5.75 

150  bu.  Potatoes  (a)       .60 

15  bu.  Wh.  Beans  @     2.20 

He  hands  us  cash  to  apply  on  sale,  $100,  and  his  30  day  note  for  balance. 
We  give  on  page    100    the    form  of  sales  book  entry  as  it  would  appear  after  posting. 
Why  are  the  check  marks  entered  opposite  the  name  of  C.  S.  Munson  and  Cash? 


a 

14. 

"     14. 
15  brl.  Onions 

Jan. 

16. 

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16. 

12, 

Jan.  16. 
$244.75. 

Jan. 

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100 


NEW  INDUCTIVE  BOOKKEEPING 


A  SALE  FOR  CASH  AND  NOTE 

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Jan.  18.  Geo.  H.  Adams  has  delivered  to  the  firm  his  check  for  the  amount  of  his  note 
and  interest,  in  favor  of  L.  Moore,  and  which  was  paid  from  the  firm  funds  on  Jan.  16. 

Jan.  18.  Sold  to  A.  N.  Davis  on  account,  subject  to  discount  of  five  per  cent  for  pay- 
ment within  30  days,  450  lb.  Lard  @  7%c;  260  lb.  Butter  @  19>^c;  40  bu.  Beans  @  $2.30. 

Enter  terms  in  the  sales  book  as  follows : 

A  SALE  ON  ACCOUNT  WITH  A  DISCOUNT  OFFER 


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Jan.  18.     Handed  E.  C.  Mallory  cash,  $50,  to  apply  on  Roberts'  note  in  his  favor  of 
Nov.  15,  assumed  by  the  firm  in  the  opening  entry. 

Jan.  18.     Bought  of  F.  J.  McCormack  175  lb.  live  poultry  @  8^  cents.    Gave  him  in 
payment  an  order  for  merchandise  on  T.  W.  McLean. 

Jan.  19.     T.  S.  Appleton  has  sent  in  his  bill  for  stationery  for  office,  $17.25,  which  has 
been  paid  in  cash. 

Jan.  19.     Remitted  to  Central  Produce  Co.,  cash  on  account,  $150. 
"     19.     Geo.  H.  Adams  has  drawn  out  cash  for  personal  use,  $75. 
"     19.     Cash  sales  today,  $391.70. 

"     19.     Bought  of  T.  S.  Bell  for  cash,  5  tons  Coal  @  $7.20,  for  use  in  store. 
"     20.     Sold  to  A.  N.  Davis : 

18  brl.  Pork  @  $13.50 

125  bu.  Potatoes  @         .70 

He  has  given  his  check  to  apply  on  sale,  $200,  balance  at  10  days. 

Jan,  20.     Gave  J.  B.  Jones,  our  produce  buyer,  cash  $750.25,  for  sundry  purchases  of 
produce  per  bills  rendered. 

Jan.  20.     Sold  to  the  Central  Produce  Co.  120  cs.  Eggs  (a)  $2.55,  375  lb.  Live  Poultry 
@  8^2 c.    They  have  given  us  their  check  for  $250  to  apply.    Balance  at  30  days. 

Jan.  20.     C.  F.  Roberts  has  had  delivered  at  his  residence,  2  tons  of  the  firm's  Coal  pur- 
chased Jan.  19,  for  which  he  is  charged  at  the  rate  of  $7.50  per  ton. 

Journalize  this  transaction  on  a  piece  of  practice  paper  and  submit  it  to  your  teacher  for 
approval,  before  entering  in  your  journal. 

Jan.  20.     Bought  of  C.  A.  Winter  a  bill  of  produce  amounting  to  $28.75,  which  is  to  be 
applied  in  part  payment  of  his  note  of  Aug.  15,  and  now  held  by  the  firm. 

Jan.  21.     Settled  our  account  with  Randall  &  Sons  to  date  by  handing  them  our  30  day 
note  for  $220.60. 

Jan.  21.     Petty  cash  sales  today,  $162.55. 


SET  THREE— PRODUCE  AND  PROVISION  BUSINESS  101 

Jan.  23.     Sold  to  Central  Produce  Co.  on  account : 

65  cs.  Eggs  @  $2.40 

428  lb.  Live  Poultry  @       .08 

Jan.  23.     Received  cash  from  L.  Matthews  to  apply  on  account,  $200. 
"     23.     Sold  to  N.  Smith  &  Co.,  for  cash: 

140  bu.  Potatoes  @  $  .60 

25  bu.  Wh.  Beans  @     2.20 

756  lb.  Lard  @       .07 

Jan.  23.     Geo.  H.  Adams  has  withdrawn  cash  for  personal  use,  $15. 
"     24.     Paid  cash  for  telephone  rent  for  January,  $3.75. 

"     24.     Bought  of   S.    P.   Martin  &  Sons,   Merchandise  per  their  bill   of  Jan.    23, 
$348.25.    Gave  them  our  note  at  60  days  for  $250  and  cash  for  the  balance. 

Jan.  24.     Paid  cash  for  freight  on  goods  purchased  of  S.  P.  Martin  &  Sons,  $34.90. 
"     25.     Sold  to  Chas.  Daniels,  receiving  his  check  for  $150  in  part  payment,  balance 
on  account : 

800  lb.  Lard  @  $  .07^ 

35  brl.  Sn.  Flour  @     5.60 

200  lb.  Butter  @       .18 

Jan.  25.  Purchased  from  A.  T.  Brown  a  quantity  of  Butter  amounting  to  $19.25,  giv- 
ing in  payment  our  order  on  Charles  Daniels  for  cash. 

Jan.  26.  C.  A.  Winter  has  given  us  his  check  in  payment  of  his  note  of  July  10  for 
$95.40  with  accrued  interest,  $4.25. 

Jan.  27.     S.  B.  Potter  has  given  us  his  check  for  $250,  to  apply  on  his  account. 
"     28.     Bought  of  the  Madison  Vehicle  Co.,  on  our  note  at  60  days,  a  dray  for  use  in 
our  delivery  department,  $75. 

Jan.  28.     Chas.  Daniels  has  given  us  his  note  at  60  days  for  $200  to  apply  on  account. 
"     29.     Sold  to  R.  Shaw  &  Co.  50  brl.  Apples  @  $3.75,  25  brl.  Acme  Flour  @  $6.40, 
receiving  in  payment  their  check  for  $250  and  their  note  at  30  days  for  the  balance. 
Entry  as  in  sale  of  Jan.  18  to  C.  S.  Munson. 

Jan.  29.     A.  C.  Talbot  of  25  Harper  street,  has  presented  the  following  order : 
Roberts  &  Adams,  Lincoln,  Neb.,  Jan.  26,  19 — . 

Lincoln,  Neb. 
Dear  Sirs : — Kindly  deliver  to  the  bearer,  Mr.  A.  C.  Talbot,  goods  from  your  store  to 
any  amount  not  exceeding  one  hundred  dollars,  and  charge  the  same  to  our  account,  sending 
us  bill  for  same.  Very  truly, 

Randall  &  Sons. 
On  above  order  Mr.  Talbot  has  purchased  5  brl.  Flour  (5)  $6.50,  50  bu.  Potatoes  @  60c, 
200  lb.  Bacon  (a)  13^ c.    Entry  as  in  sale  on  order  of  S.  B.  Potter,  Jan.  10. 
Jan.  31.     Petty  cash  sales  today  amount  to  $171.20. 

Balance  the  cash  book  and  foot  up  the  journal  and  sales  book  ready  for  posting. 
Post  the  ledger,  and  prepare  trial  balance  as  previously  instructed. 

Partnership  Balance  Sheet.  The  Financial  Statement  and  the  Statement  of  Profits 
and  Losses  for  a  partnership  do  not  differ  from  those  required  in  an  individual  proprietor- 
ship. In  the  Balance  Sheet  Proof,  however,  the  investment  balance  of  each  partner  is  entered, 
and  the  net  gain  of  each  is  added  to  show  the  present  net  investment  of  each  partner. 

A  form  for  a  Balance  Sheet  Proof  as  required  for  this  business  is  given  on  page  102. 
Study  it  carefully  before  preparing  your  Balance  Sheet  Statements.  After  which  close  your 
books,  as  previously  instructed,  prepare  them  for  inspection,  and  deliver  them  to  your  teacher 
for  approval. 

The  inventories  for  this  closing  are  as  follows    : 

Chattels   $  900.00 

Expense,  prepaid  rent 120.00 

Interest  Receivable 7.50 

Interest  Pavable 6.25 

Merchandise 2225.37 


102 


NEW  INDUCTIVE  BOOKKEEPING 


Note. — The  inventory  of  interest  receivable  is  entered  to  the  credit  o*  the  Interest  account,  and  the 
interest  payable  to  the  debit.     Why? 

In  closing  the  ledger,  close  the  Expense,  Chattels,  Interest,  and  Merchandise  accounts 
into  "Loss  and  Gain  Closing  Jan.  31."  Then  close  the  latter  into  the  partners'  accounts, 
crediting  each  with  one-half  of  the  net  gain. 

While  waiting  for  the  return  of  your  books,  prepare  for  the  General  Review  Quiz  On 
this  page. 

PROOF  OF  BALANCE  SHEET  PARTNERSHIP 


GENERAL  REVIEW  QUIZ 

1.  What  is  the  use  of  the  Cash  Book? 

2.  In  what  respect  does  the  Cash  Book  differ  from  the  Cash  account  in  the  Ledger  ? 

3.  How  do  we  post  from  the  Cash  Book? 

4.  How  is  the  Cash  Book  balanced  ? 

5.  How  do  we  mark  the  Cash  Book  entries  that  do  not  require  posting? 

6.  What  is  the  use  of  the  Sales  Book  ? 

7.  Of  what  does  each  Sales  Book  entry  consist? 

8.  How  do  we  post  debits  from  the  Sales  Book? 

9.  What  credits  do  we  post  from  the  Sales  Book? 

10.  What  is  the  object  of  a  Trial  Balance? 

11.  Does  the  Trial  Balance  always  prove  that  the  Ledger  is  correct  ? 

12.  What  steps  should  be  taken  if  the  Ledger  is  not  in  balance? 

13.  What  should  be  done  preparatory  to  closing  the  Ledger  ? 

14.  What  inventories  are  resources,  and  what  ones  are  liabilities? 

15.  How  are  inventories  recorded  in  the  Ledger? 

16.  What  Ledger  accounts  are  usually  closed? 

17.  How  should  the  closing  Loss  and  Gain  account  be  closed  ? 

18.  How  should  the  proprietary  account  be  closed  ? 

19.  Name  your  Commercial  Accounts  in  Set  Three. 

20.  Name  your  Financial  Accounts  in  the  same  set. 


Set  Four— Retail  Grocery  Business 

In  this  set,  the  student  is  to  assume  the  proprietorship  of  a  retail  grocery  business  fol- 
lowing the  latest  and  most  practical  methods  in  current  use  among  retailers. 

The  books  are  to  be  kept  in  the  first  part  of  the  set,  by  the  method  known  as  "Single 
Entry."  In  this  form  of  bookkeeping,  accounts  are  kept  with  cash  and  personal  accounts 
only,  and  the  "double  entry  principle"  (see  page  7)  is  applied  only  in  the  case  of  cash  trans- 
actions. Thus,  if  a  sale  on  account  is  made,  the  buyer  is  debited,  but,  as  no  account  is  kept 
with  merchandise,  there  will  be  no  corresponding  credit,  as  there  would  be  in  double  entry. 
Also,  if  we  pay  out  cash  for  expense,  we  credit  cash,  but,  as  there  is  no  Expense  account,  no 
debit  entry  is  made. 

Note. — In  "pure  single  entry,"  no  accounts  would  be  kept  except  with  persons,  but  such  method  is 
rarely  if  ever  used,  since  it  is  always  necessary  to  keep  the  cash  account,  and  very  often  an  expense  ac- 
count is  also  kept.  In  fact,  as  many  accounts  may  be  kept  as  is  desirable,  but  the  method  is  still  called 
"single  entry"  unless  there  is  a  complete  system  of  accounts,  involving  a  debit  for  every  credit,  in  which 
case  the  system  is  called  "double  entry." 

Single  entry  is  adapted  tq>  small  retailing  shops,  or  stores,  where  the  most  important  ac- 
counts are  those  with  persons,  and  where  the  proprietor  does  not  care  to  keep  special  accounts 
with  the  various  sources  of  loss  or  gain. 

To  afford  the  student  means  of  comparing  the  methods  and  merits  of  these  two  general 
forms  of  accounting,  the  first  seventy-three  transactions  of  this  set  will  be  recorded  by  the 
single  entry  method  and  the  remainder  by  double  entry. 

The  books  generally  used  in  single  entry  are  the  day  book,  cash  book,  and  ledger. 

THE  DAY  BOOK 

This  book  (also  called  "journal")  is  ruled  like  an  ordinary  journal,  except  that  the 
vertical  blue  lines,  to  separate  titles  from  explanation,  is  not  used.  The  money  columns  are 
not  used  to  distinguish  debits  and  credits,  as  in  the  double  entry  journal.  The  first  money 
column  is  used  for  items,  the  second  for  totals,  while  the  debits  are  distinguished  from  the 
credits  by  writing  the  abbreviations  "Dr."  and  "Cr."  after  the  title  in  each  entry. 

The  day  book  is  also  used  for  "memorandum  entries,"  that  is,"  brief  records  of  transac- 
tions, not  involving  a  debit  or  credit  on  any  account,  but  a  record  of  which  it  is  desirable  to 
keep. 

The  accompanying  form  of  day  book  illustrates  the  method  of  keeping  this  book.  The 
entries,  except  as  to  dates  and  amounts,  are  the  same  as  those  required  by  the  students'  day 
book  in  the  transactions  indicated. 

FORM  OF  DAY  BOOK  WITH  ILLUSTRATIVE  ENTRIES 


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104 


NEW  INDUCTIVE  BOOKKEEPING 


SINGLE  ENTRY  CASH  BOOK— LEFT  FOLIO 


*-<^^S 


THE  CASH  BOOK 

The  cash  book  in  Single  Entry  is  kept  the  same  as  in  Double  Entry,  except  that  titles 
of  other  than  personal  accounts  are  not  given,  and  only  debits  and  credits  of  personal  ac- 
counts are  posted. 

Sales  at  retail  for  cash,  if  not  entered  in  the  duplicate  sale  pad  or  cash  register,  are 
usually  kept  on  file  and  at  the  close  of  the  day  are  entered  in  the  cash  book  in  one  account 
Loose  Leaf  Blanks.      If  loose  leaf  blanks  are  used,  the  student  will  place  ruled  paper  in 
the  binders  for  this  set  as  follows : 
Journal,  Notes,  and  Cash. 

1st  Cord — 1  sheet  journal  ruling  for  Day  Book  in  Single  Entry  and  journal  in 

Double  Entry. 
2d    Cord — 2  sheets  journal  ruling  for  Cash  Book,   using  pages   2   and   3   for 
Single  Entry  and  pages  4  and  5  for  Double  Entry. 
Ledger  and  Trial  Balances. 

1st  Cord — 1  sheet  ledger  ruled  for  three  accounts  on  a  page. 

2d    Cord — 1  sheet  journal  ruling  for  statements  and  trial  balances. 

TRANSACTIONS  FOR  SET  ONE 

1.  Begin  business  at  329  Second  St.,  with  a  cash  capital  of  $800. 

The  teacher  will  hand  you  the  cash,  which  you  will  count  and  place  in  the  "Cash  Envelope,"  in 
your  office  file.  The  cash  envelope  represents  your  safe,  where  all  cash  should  be  kept  that  is  not  re- 
quired in  the  cash  register.     (See  Cash  Register,  page  102.) 

2.  Deposit  cash  in  bank,  $700,  using  a  new  page  of  your  pass  book. 

3.  Buy  of  Wilson  Bros,  their  stock  of  merchandise  and  store  fixtures  for  a  consideration 
of  $1000,  giving  your  check  for  $600  to  apply  on  the  purchase  price  and  leaving  the  balance 
on  account. 

Dispose  of  outgoing  and  incoming  papers  in  this  set  the  same  as  in  Set  One.  In  case  of 
doubt  as  to  any  day  book  or  cash  book  entry,  refer  to  the  illustrative  forms  of  these  books 
on  pages  103  to  105.  In  this  set,  merchandise  tickets  will  not  be  used  except  for  proving  in- 
coming invoices,  after  which  they  can  be  destroyed.  The  required  inventories  will  be  given 
in  the  text. 


Tablet  Course.  Receive  a  bill  of  sale  and  a 
receipt  through  your  Commercial  Exchange  depart- 
ment and  tablet,  and  deliver  the  cash  through  Com- 
munity Cash. 


Office  Course.  Make  this  purchase  at  the 
Wholesale  Office  or  the  Commercial  Exchange,  as 
the  teacher  may  direct,  paying  the  required  cash 
when  you  receive  the  bill  of  sale. 

4.     Order   the    following  merchandise   on  account,  using  a  duplicate  order  ticket :   5  brl 

Apples,  10  bu.  Onions,  100  lb.  Beans,  2  bx.  Cheese,  20  bu.  Potatoes. 

Office  Course.    If  you  carry  out  this  transac-  Tablet  Course.    Order  the  above  supplies  of 

tion  at  the  Commercial  Exchange,  order  of  the  Fen-  the  Fenton  Produce  Co.,  sending  your  order  through 
ton  Produce  Co.  If  you  deal  with  the  wholesale  Outgoing  Papers.  Their  invoice  will  be  delivered 
office,  order  of  the  firm  designated  by  your  teacher.        through  your  Wholesale  pad. 

Enter  above  invoice  in  your  day  book,  following  the  model  form,  page  106,  except  as  to  date  and 
amount. 


SET  FOUR— RETAIL  GROCERY  BUSINESS 


105 


SINGLE  ENTRY  CASH  BOOK— RIGHT  FOLIO 


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5.  Sell  to  James  Armstrong,  127  Third  St.,  to  be  delivered  -by  9  a.  m.,  collecting  cash 
for  the  bill,  5  lb.  A  Sugar  @  6c,  1  lb.  Mocha  Coffee  @  40c,  2  doz.  Eggs  @  18c,  ±yA  lb.  Ham 
@  14c,  y2  bu.  Apples  @  $1.50. 

Enter  this  sale  in  your  cash  sale  pad,  following  the  instructions  given  on  the  cover  of  the  pad. 
Your  entry  in  the  sale  pad  will  be  like  the  following,  with  the  exception  of  your  name  as  proprietor,  your 
town  and  the  current  date.     Bill  written  on  cash  sale  tickets  will  not  need  to  be  marked  "Paid." 

SHEET  FROM  THE  CASH  SALE  PAD 


DUPLICATE  SALE  TICKET. 


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CASH  SALE 


106 


NEW  INDUCTIVE  BOOKKEEPING 


Office  Course.     Deliver  this  sale  ticket  at  the  Tablet  Course.  Deliver  this  sale  ticket  through 

Commercial  Exchange  and  receive  the  cash.  Outgoing  Papers    and    take    the    cash    from  Com- 

munity Cash. 

Place  this  cash  in  envelope  marked  "Cash  Register"  without  making-  entry  of  it  except 
in  the  column  of  the  Register  marked  "Cash  Sales." 

The  Cash  Register.  The  modern  cash  register  is  used  for  keeping  a  large  proportion 
of  the  records  of  a  retail  business.  It  can  be  used  either  with  Single  or  Double  Entry  book- 
keeping. It  registers  and  keeps  in  separate  columns  the  amount  of  sales  for  cash,  cash  re- 
ceived on  account,  sales  on  account,  and  cash  paid  out.  These  separate  columns  are  added 
automatically,  enabling  the  merchant  to  determine  the  amount  of  each  and  transfer  it  to  his 
books  of  record.  In  the  student's  business  equipment  we  have  furnished  a  special  envelope  to 
be  used  for  a  cash  register,  with  a  pad  of  record  sheets  ruled  in  columns  for  the  four  divisions 
of  records  made  in  the  modern  registers.  With  the  exception  of  registering  amounts  with  a 
pencil  instead  of  striking  keys  that  register  the  figures,  the  accounting  methods  will  be  the 
same.  The  form  on  the  next  page  represents  one  of  the  record  sheets  filled  out  for  a  day's 
transactions.  The  amount  in  circle  represents  the  small  bills  and  fractionals  that  are  placed 
in  the  register  at  the  beginning  of  the  day,  and  as  no  balance  is  placed  in  the  register  at  the 
beginning  of  this  set,  the  student  will  have  no  such  balance  on  his  first  record  sheet. 

DAY  BOOK  ENTRY  FOR  AN  INVOICE  ON  ACCOUNT 


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6.  Sell  C.  E.  Bonner,  229  Fourth  Avenue,  to  be  delivered  by  10  a.  m.,  6  lb.  G  Sugar  @ 
6J/2 c,  2  cans  Peaches  @  25c,  6  cakes  Ivory  Soap  @  5c,  5^  lb.  Butter  @  22c,  1  pk.  Turnips  @ 
18c,  2  gal.  Maple  Syrup  @  75c,  2  lb.  Coffee  @  35c,  collecting  cash  for  the  bill. 

Follow  the  routine  given  for  Transaction  5. 

7.  The  Union  Hotel  Co.,  316  Park  Avenue,  order  on  account  for  delivery  at  10  a.  m., 
100  lb.  G  Sugar  @  6V2c,  20  lb.  Mocha  Coffee  @  40c,  10  doz.  Eggs  @  18c,  1  doz.  Canned 
Peaches  @  25c  per  can,  5  lb.  Tapan  Tea  @  45c,  15  lb.  Ham  @  lie,  1  box  Grapes,  20  lb., 
@  12c. 

Select  one  of  your  account  pads  for  the  Union  Hotel  Co.,  writing  their  name  on  the  cover.  Make 
entry  on  the  first  white  sheet  and  carbon  duplicate  on  the  yellow  sheet,  like  the  form  on  page  110  except 
that  the  amount  forwarded  will  be  blank  on  the  first  sale. 


Office  Course.    Deliver  this  sale  ticket  at  the 
Commercial  Exchange. 


Tablet     Course.     Deliver 
through  Outgoing  Papers. 


this     sale     ticket 


Enter  the  amount  of  this  sale  in  your  cash  register  in  the  column  marked  "Sales  on 
Account." 

8.  Sell  John  Emery,  492  Third  Avenue,  2  pa.  Rolled  Oats  @  10c,  2*/2  lb.  Cheese  @ 
15c,  4  lb.  Prunes  @  12^ c,  3  lb.  Java  Coffee  @  35c,  collecting  cash  for  the  bill. 

Follow  the  usual  routine  for  cash  sales.     If  the  time  for  delivering  the  merchandise  is  not  specified 
in  the  order,  the  time  will  be  left  blank  in  the  sale  ticket. 

9.  Pay  John  Turner  cash  for  cleaning  store  room,  $2,  taking  no  receipt. 

Follow  the  usual  routine,  delivering  a  slip  of  paper  with  the  currency  descriptive  of  the  transaction. 
Take  the  money  out  of  your  cash  register,  leaving  a  ticket  in  the  register  for  entry  at  the  close  of  the  day. 

10.  Sell  the  City  Restaurant,  168  Second  Street,  for  delivery  at  11  a.  m.,  1  brl.  Apples 
@  $3.25,  75  lb.  A  Sugar  @  6c,  10  bu.  Potatoes  @  50c,  5  lb.  Rice  @  9*4c,  collecting  cash. 

Hereafter  .the  student  will  follow  the  usual  routine  in  the  case  of  cash  sales  unless  special  instruc- 
tions are  given. 


SET  FOUR— RETAIL  GROCERY  BUSINESS 


107 


11.  Sell  A.  R.  Baker,  212  Second  Street,  on  account,  4  lb.  Apricots  @  15c,  6  cakes 
Ivory  Soap  @  5c,  5  lb.  Butter  @  20c,  50  lb.  C  Sugar  @  5>^c,  3  lb.  Java  Coffee  @  35c,  2  gal. 
N.  O.  Molasses  @  40c,  10  lb.  Beans  @  5c. 

Give  Baker  an  account  pad  and  proceed  with  the  transaction  as  you  were  instructed  to  do  in  Trans- 
action 7. 

12.  Sell  Mrs.  N.  Hammond,  217  Sixth  Street,  j/2  lb.  Japan  Tea  @  45c,  V/2  bu.  Potatoes 
@  50c,  4  lb.  Rice  @  10c,  10  lb.  C  Sugar  @  5^c.  4  lb.  Rio  Coffee  @  25c,  1  sk.  Flour  @ 
75c,  12  lb.  Mess  Pork  @  9c,  collecting  cash. 

13.  Sell  Henry  Keister,  459  Sixth  Street,  1  bu.  Onions  @  95c,  6  cans  Corn  @  16^c, 
4  head  Cabbage  @  10c,  -V/2  doz.  Oranges  @  25c,  10  lb.  Beans  @  5c,  12  lb.  G  Sugar  @  6^c, 
collecting  cash. 

14.  Sell  Mrs.  M.  J.  Fletcher,  326  Archer  Avenue,  on  account,  to  be  delivered  by  3 
p.  m.,  5  lb.  Butter  @  20c,  2  gal.  Maple  Syrup  @  75c,  5  lb.  Laundry  Starch  @  10c,  10  lb. 
Rio  Coffee  @  25c,  2  doz.  Lemons  @  25c,  2  sk.  Flour  @  75c,  1  lb.  Eng.  Breakfast  Tea  @ 
50c. 

Give  Mrs.   Fletcher  an  account  pad,   and  proceed  as  in  Transaction  7. 

15.  Sell  N.  M.  Martin,  424  Third  Street,  6  lb.  Grapes  @  12c,  3  lb.  Java  Coffee  @ 
35c,  8  lb:  G  Sugar  @  6^c,  6  lb.  L.  Starch  @  10c,  4  doz.  Lemons  @  25c,  1  lb.  Eng.  Break- 
fast Tea  @  55c,  collecting  ca^sh. 

A  DAY'S  RECORD  SHEET 


Cash  Sales 


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16.     Pay  cash  for  sundry  farm  produce,  $15.20. 

Tablet  Course. 

munity  Cash. 


Place  the  currency  in  Com- 


'Cash  Payments"  and  place  a  ticket  in 


Office  Course.  Hand  the  currency  to  the 
Commercial  Exchange,  with  a  ticket  describing  the 
transaction. 

Enter  this  transaction  in  your  cash  register  in  the  column 
the  register  envelope  describing  the  transaction  for  entry  later. 

Proving  Cash.  It  is  customary  for  the  business  man  to  prove  his  cash  in  the  cash 
register  at  the  close  of  the  day  and  remove  the  cash  to  his  safe,  leaving  the  register  empty 
until  the  opening  of  business  next  day,  when  a  supply  of  small  change  is  placed  in  the  register 
for  making  change. 

Summaries  from  the  Cash  Register.  For  statistical  purposes,  a  daily  summary  of  all 
results  shown  on  the  cash  register  should  be  transferred  on  a  summary  sheet.  For  con- 
venience these  sheets  are  bound  in  book  form.  The  form  on  page  108  represents  a  day's 
transactions  in  which  all  of  the  spaces  on  the  summary  sheet  are  used,  the  cash  entries  being 
taken  from  the  record  sheet  on  this  page.  The  student  will  readily  see  that  not  all  of  the 
spaces  will  be  required  on  the  first  summary  sheet. 

The  student  may  fill  out  the  first  summary  sheet  in  his  book,  using  the  date  of  Trans- 
action 16. 


108 


NEW  INDUCTIVE  BOOKKEEPING 


Transaction  No.. 


A  SHEET  FROM  THE  SUMMARY  BOOK 

Summary  of  Cash,  Sales,  and  Accounts  Receivable. 

CASH. 


.19  ,._. 


Cash  Carried 

Cash  Sal 

Cash  Received  on  Account 

Total  Cash  Received 


Total  Received  in  Register.. 


Cash  Payments. 
Cash  in  Register  _ 


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SALES  TO  DATE. 


Sales  Forward 

Cash  Sales.. .... 

Sales  on  Account 

Total.. 

Less  Returned  Goods  and  Allowances. 
Total  Sales  to  Date ^. 


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ACCOUNTS  RECEIVABLE. 


Balance  Forward 

Sales  on  Account 

Credited  on  "Account:    Cash 
Balance  of  Accounts  Receivable 


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Allowances  $. 


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In  order  to  secure  uniform  results  in  Set  Four,  we  have  arranged  for  proving  cash  and 
making  entries  at  the  close  of  Transactions  16,  31,  42,  etc.,  and  these  entries  will  have  the 
current  datings  on  the  student's  books.  The  student's  cash  register  at  the  close  of  Transac- 
tion 16  will  show  entries  in  three  columns,  each  of  which  should  be  footed  up.  The  footing 
of  "Cash  Sales"  will  show  the  cash  placed  in  the  register  ($35.73),  the  footing  of  "Cash 
Paid"  will  show  the  money  taken  out   ($17.20),  and  the  difference  between  these  footings 


SET  FOUR— RETAIL  GROCERY  BUSINESS  109 


will  show  the  balance  in  the  register  ($18.53.)  As  the  student's  work  in  Transaction  17  is 
likely  to  follow  the  balancing  of  the  cash  register  without  much  delay,  the  student  may  place 
$10  in  the  safe  (cash  envelope)  and  keep  $8.53  in  the  register  for  making  change. 

Entries  from  the  Cash  Register.  Enter  the  total  of  "Cash  Sales"  in  your  Cash  Re- 
ceived, like  the  second  entry  in  the  model  cash  book  on  page  104.  The  two  tickets  for  cash 
payments  should  be  entered  in  your  Cash  Paid,  like  the  second  and  third  entries  in  the  model 
cash  book  on  page  105,  the  entry  from  the  check  book  being  written  first.  The  model  entries 
do  not  always  have  the  same  amounts  that  the  student's  books  will  have. 

In  making  the  daily  cash  proof,  the  amount  in  register  plus  the  amount  in  safe  will  make 
the  cash  on  hand. 

Before  beginning  the  next  group  of  transactions,  remove  the  first  record  sheet  from  the 
cash  register  pad  and  enter  on  the  second  sheet  in  the  "Cash  Sales"  column,  the  balance  of 
cash  in  the  register,  drawing  a  circle  about  the  amount,  to  indicate  that  it  is  to  be  deducted 
from  the  total  of  the  column  to  show  the  cash  sales  for  the  day.  ( See  Model  Record  Sheet 
on  page  107.) 

17.  Sell  W.  C.  Norton,  213  Third  Avenue,  25  lb.  A  Sugar  @  6c,  4  lb.  Apricots  @ 
15c,  2  sk.  Flour  @  75c,  1  sk.  Corn  Meal  @  45c,  5  lb.  Mocha  Coffee  @  40c,  6  doz.  Eggs  @ 
18c,  collecting  cash. 

18.  Pay  cash  for  sundry  farm  produce,  $5.10. 

Dispose  of  this  transaction  the  same  as  you  were  instructed  to  do  in  Transaction  No.  16. 

19.  Sell  to  John  Thomas,  419  Grand  Avenue,  on  account,  to  be  delivered  before  1  p.  m., 
2  doz.  Bananas  @  15c,  4  lb.  Prunes  @  12>4c,  2  gal.  Crystal  Syrup  @  35c,  3  lb.  Java  Coffee 
@  35c,  2  doz.  Oranges  @  25c,  y2  lb.  Cheese  @  15c,  2  lb.  Japan  Tea  @  35c,  50  lb.  G  Sugar 
@  6^c. 

Give  Thomas  an  account  pad. 

20.  Sell  E.  H.  Preston,  195  Second  Avenue,  1  lb.  Y.  H.  Tea  @  45c,  2  doz.  Bananas  @ 
15c,  2  gal.  Crystal  Syrup  @  45c,  4  lb.  Java  Coffee  @  35c,  7  lb.  Bacon  @  12y2z,  12  lb.  G 
Sugar  @  6j4c,  collecting  cash. 

21.  Order  the  following  merchandise  on  account,  using  an  order  ticket  as  usual :  1  bag 
Mocha  Coffee,  1  brl.  N.  O.  Molasses,  1  sack  Rice,  1  box  Starch. 

Follow  instructions  given  in  Transaction  No.  4,  ordering  of  Dalton  &  White,  unless  the 
teacher  designates  another  firm. 

22.  Sell  Mrs.  E.  M.  Sawyer,  419  Third  Street,  3  doz.  Eggs  @  18c,  y2  bu.  Apples  @ 
$1.50,  y2  bu.  Turnips  @  75c,  2  bunches  Radishes  @  10c,  2  lb.  Cheese  @  15c,  collecting  cash. 

23.  Deposit  cash  in  bank,  $100. 

24.  Sell  Cyrus  Upton,  498  First  Avenue,  6  cans  Peaches  @  25c,  12>^  lb.  Ham  @ 
14c,  7  lb.  Apricots  @  15c,  20  cakes  Ivory  Soap  @  5c,  15  lb.  Beans  @  5c,  collecting  cash. 

25.  Give  Wilson  Bros,  check  for  $50  to  apply  on  account,  taking  a  receipt  for  same. 

Office  Course.    Leave  this  check  at  the  Com-  Tablet  Course.    Deliver    the    check    through 

mercial  Exchange  and  call  for  the  receipt.  Outgoing  Papers  and  remove  the  receipt  from  your 

Commercial  Exchange  pad. 

26.  Sell  E.  M.  Webster,  212  Fourth  Street,  2y2  bu.  Potatoes  @  50c,  10  lb.  Rice  @ 
10c,  12  lb.  C  Sugar  @  5y2c,  11  lb.  Bacon  @  12>4c,  4  hd.  Lettuce  @  5c,  2  sk.  Table  Salt  @ 
10c,  collecting  cash. 

27.  Sell  Henry  Custer,  399  Center  Street,  on  account,  to  be  delivered  at  once,  50  lb. 
Mess  Pork  @  9c,  4  sk.  Flour  @  75c,  10  lb.  Butter  @  20c,  5  bu.  Potatoes  @  50c,  1  bu. 
Onions  @  95c,  5  hd.  Cabbage  @  10c,  2  bunches  Radishes  @  10c. 

Give  Custer  an  account  pad. 

28.  Sell  the  City  Restaurant,  168  Second  Street,  for  cash,  to  be  delivered  at  once,  10 
pkg.  Rolled  Oats  @  10c,  10  lb.  Y.  H.  Tea  @  40c,  10  gal.  Crystal  Syrup  @  35c,  10  lb.  Cheese 
@  15c,  1  brl.  Apples  @  $2.75,  1  brl.  Flour  @  $5.50,  5  cans  Peaches  @  25c,  collecting  cash. 

29.  Sell  the  Union  Hotel  Co.,  316  Park  Avenue,  on  account,  to  be  delivered  at  once, 
10  lb.  Cheese  @  Uy2c,  50  lb.  Butter  @  18#c,  25  lb.  Bacon  @  12c,  1  brl.  Flour  @  $5.50,  6 
gal.  Maple  Syrup  @  70c,  120  lb.  C  Sugar  @  5%c. 

Enter  this  sale  on  the  second  white  sheet  of  the  Union  Hotel  Co.'s  account  pad,  bringing 


110 


NEW  INDUCTIVE  BOOKKEEPING 


forward  the  amount  of  the  previous  sale  as  illustrated  on  page  112.     Remove  the  white  sheet 
and  deliver  it  to  the  customer  in  the  usual  manner. 

30.  Sell  A.  R.  Cushman,  116  Ninth  Street,  5  lb.  Java  Coffee  @  35c,  y,  bu.  Onions  @ 
95c,  3  gal.  Maple  Syrup  @  75c,  3  hd.  Cabbage  @  10c,  collecting  cash. 

31.  Sell  A.  R.  Baker,  212  Second  Street,  on  account,  to  be  delivered  by  1  p.  m.,  16 
cans  Corn  @  16 %c,  10  cakes  Ivory  Soap  @  5c,  4  doz.  Eggs  @  15c,  25  lb.  A  Sugar  @  6c,  2 
sk.  Corn  Meal  @  45c,  50  lb.  Bacon  @  12y2c. 

Enter  this  sale  on  Baker's  account  pad,  forwarding  the  amount  of  the  previous  sale. 

Total  your  cash  register,  and  transfer  all  cash  except  $12.43  to  your  safe  (cash  envelope) 
as  instructed  after  Transaction  16.  Make  summary  entries  as  you  did  after  Transaction  16, 
enter  in  cash  book,  and  test  your  cash  book  footings  without  balancing. 

32.  Sell  Hiram  Oxlev,  672  Tenth  Street,  2  gal.  N.  O.  Molasses  @  50c,  3  lb.  Java  Cof- 
fee @  35c,  2l/2  lb.  Cheese  @  15c,  7  lb.  Mess  Pork  @  9c,  4  hd.  Cabbage  @  10c,  3  hd.  Lettuce 
@  5c,  2  sk.  Flour  @  75c,  collecting  cash. 

33.  Sell  John  Thomas,  419  Grand  Avenue,  on  account,  to  be  delivered  by  2  p.  m.,  12  lb. 
Bacon  @  12^c,  2  sk.  Table  Salt  @  10c,  4  doz.  Eggs  @  18c,  25  lb.  A  Sugar  @  6c,  5  lb. 
Mocha  Coffee  @  40c,  12  lb.  Beans  @  5c,  6  lb.  Rice  @  10c. 

Enter  this  sale  on  Thomas's  account  pad,  forwarding  the  amount  of  the  previous  sale. 
A  SHEET  FROM  AN  ACCOUNT  PAD 


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SET  FOUR— RETAIL  GROCERY  BUSINESS 


111 


34.  Sell  Chas.  E.  Gordon,  617  Fifth  Avenue,  on  account,  to  be  delivered  before  4  p.  m., 
25  lb.  C  Sugar  @  5J/2c,  2  doz.  Bananas  @  15c,  4  lb.  Cheese  @  15c,  1  bu.  Potatoes  @  50c,  5 
lb.  Butter  @  20c,  4  lb.  Java  Coffee  @  35c,  Sy2  lb.  Ham  @  14c. 

Give  Gordon  an  account  pad. 

35.  Sell  J.  C.  Jackson,  457  Eighth  Street,  2  doz.  Bananas  @  15c,  9  lb.  Bacon  @  12y2c, 
2  sk.  Flour  @  75c,  2  lb.  Eng.  Breakfast  Tea  @  55c,  16  lb.  G  Sugar  @  6>^c,  3  lb.  Mocha  Cof- 
fee @  40c,  2  doz.  Oranges  @  25c,  collecting  cash. 

36.  Deposit  cash  in  bank,  $50. 

37.  Sell  Cyrus  Gordon,  422  Fourth  Street,  2  lb.  Y.  H.  Tea  @  45c,  25  lb.  A  Sugar  @ 
6c,  3  cans  Peaches  @  25c,  6l/2  lb.  Ham  @  14c,  l/2  bu.  Turnips  @  75c,  5  lb.  Mess  Pork  @ 
9c,  collecting  cash. 

38.  Pay  cash  for  Butter  and  Eggs,  bought  of  farmers,  $12.50. 

39.  Give  your  check  in  payment  of  the  invoice  purchased  in  Transaction  4,  after  de- 
ducting a  cash  discount  of  2  per  cent. 

Office  Course.    Make  this  payment  at  the  of-  Tablet   Course.    Make  this  payment  through 

fice  where  you  purchased  the  merchandise  and  call        Outgoing  Papers  and  take  receipt  from  your  Whole- 
for  a  receipt  in  full.  sale  pad. 

Enter  this  transaction  in  day  book  and  cash  book  in  the  following  manner,  using  different  firm 
name  and  amount  if  necessary. 

DAY  BOOK  ENTRY  FOR  PAYMENT  WITH  DISCOUNT 


CORRESPONDING  CASH  PAID  ENTRY 


j£*£c 


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40.  Sell  Mrs.  M.  J.  Fletcher,  326  Archer  Avenue,  on  account,  4  pa.  Rolled  Oats  @ 
10c,  2  cans  Peaches  @  25c,  1  bu.  Apples  @  $1.25,  5  lb.  Butter  @  25c,  2  sk.  Flour  @  75c,  20 
lb.  G  Sugar  @  6^c,  2  lb.  Cheese  @  15c. 

Enter  this  sale  on  Mrs.  Fletcher's  account  pad,  forwarding  the  amount  of  the  previous  sale. 

41.  Pay  Thomas  Trenton  cash  for  delivering  merchandise  to  city  customers,  $2.75, 
taking  no  receipt. 

Deliver  this  cash  in  the  usual  manner. 

42.  Sell  Charles  Daniels,  214  Seventh  Street,  3  pa.  Rolled  Oats  @  10c,  7  lb.  Bacon  @ 
12y2c,  3  gal.  Crystal  Syrup  @  45c,  4  lb.  Rio  Coffee  @  25c,  6  doz.  Eggs  @  18c,  collecting 
cash. 

Total  and  prove  your  cash  register  without  making  any  transfer  to  the  safe,  make  your 
summary  entries,  and  write  up  and  test  the  cash  book  without  balancing. 

43.  Sell  Mrs.  J.  G.  Vance,  192  Third  Avenue,  iy2  lb.  Grapes  @  12c,  6  lb.  Beans  (a)  5c, 
y2  lb.  Eng.  Breakfast  Tea  @  55c,  10  lb.  A  Sugar  @  6c,  6  cans  Corn  @  16 ^c,  1  gal.  Crystal 
Syrup  @  45c,  2  bunches  Radishes  @  10c,  collecting  cash. 


112 


NEW  INDUCTIVE  BOOKKEEPING 


44.     Collect  cash  from  the  Union  Hotel  Co.  on  account,  $30. 

Forward  the  amount  of  their  account  to  the  next  white  sheet  in  their  account  pad  ami 
give  credit  for  cash,  showing  balance  unpaid,  as  illustrated  in  the  form  below. 

A  SHEET  FROM  THE  ACCOUNT  PAD  WITH  CREDIT  ENTRY 
CHARGE  SALE  TICKET 


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Time- 


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Enter  this  cash  in  your  "Cash  Register"  in  the  column  "Received  on  Account." 

45.  Collect  cash  from  Henry  Custer  on  account,  $10. 

46.  Pay  cash  for  produce  bought  of  sundry  farmers,  $12.50. 
Enter  in  cash  register,  "Cash  Payments,"  and  place  ticket  in  register. 

47.  Sell  City  Restaurant,  168  Second  Street,  for  cash,  to  be  delivered  at  once,  5  lb. 
Japan  Tea  @  42c,  12  gal.  Maple  Syrup  @  62^c,  12  lb.  Mocha  Coffee  @  37^c,  25  lb.  But- 
ter @  18c,  24  lb.  Beans  @  4^c,  6  doz.  Lemons  @  23c,  6  doz.  Bananas  @  13c,  collecting 
cash. 

48.  Purchase  the  following  merchandise  on  account,  writing  an  order  ticket  as  usual : 
10  sacks  Corn  Meal,  20  sacks  Flour,  2  cases  Oat  Meal. 

Follow  the  usual  routine,  ordering  of  the  Western  Milling  Co.,  unless  the  teacher  desig- 
nates another  firm. 

49.  Sell  C.  E.  Bonner,  219  Fourth  Avenue,  12  lb.  Beans  @  5c,  y2  bu.  Turnips  @  75c, 
1  doz.  Lemons  @  25c,  3  hd.  Cabbage  @  10c,  12  lb.  Bacon  @  12^ c,  1  lb.  Cheese  @  16c,  1  lb. 
Butter  @  18c,  collecting  cash. 


SET  FOUR— RETAIL  GROCERY  BUSINESS 


113 


50.  Collect  cash  of  Mrs.  M.  J.  Fletcher  to  apply  on  account,  $10. 
Proceed  as  in  Transaction  44. 

51.  Sell  T.  R.  Rich,  482  Fourth  Avenue,  6  lb.  Prunes  @  12y2c,  2y2  lb.  Cheese  @  15c, 
6  cans  Corn  @  16%c,  6y2  lb.  Ham  @  14c,  5  lb.  Rio  Coffee  @  25c,  1  lb.  Japan  Tea  @  45c, 
collecting  cash. 

52.  Give  your  check  to  pay  for  the  invoice  received  in  Transaction  21,  less  a  discount 
of  2  per  cent. 

Proceed  as  in  Transaction  39. 

53.  Sell  Mrs.  John  Leonard,  616  Fifth  Avenue,  3  doz.  Bananas  @  15c,  2  sk.  Table 
Salt  @  10c,  2  hd.  Lettuce  @  5c,  11^  lb.  Mess  Pork  @  9c,  1  sk.  Corn  Meal  @  45c,  2  pa. 
Rolled  Oats  @  10c,  collecting  cash. 

54.  Sell  Henry  Custer,  399  Center  Street,  on  account,  3  cans  Peaches  @  25c,  1  sk.  Corn 
Meal  @  45c,  2  lb.  Cheese  @  15c,  50  lb.  G  Sugar  @  6^c  4  doz.  Eggs  @  15c,  3  lb.  Java  Cof- 
fee @  35c,  2  gal.  Maple  Syrup  @  75c,  4  lb.  Butter  @  22^c. 

55.  Pay  cash  for  farm  produce,  $7.50. 

56.  Sell  E.  A.  Inman,  412  Fourth  Avenue,  2  lb.  Mocha  Coffee  @  40c,  2  lb.  Java  Coffee 
@  35c,  20  lb.  B  Sugar  @  6y2c,  12y2  lb.  Ham@  14c,  iy2  bu.  Potatoes  @  50c,  3  cans  Corn 
@  16%c,  collecting  cash. 

57.  Sell  Charles  E.  Gordon,  617  Fifth  Avenue,  on  account,  25  lb.  A  Sugar  @  6c,  3  doz. 
Eggs  @  18c,  J4  bu.  Apples  @  $1.50,  1  bu.  Potatoes  @  50c,  1  sk.  Flour  @  75c,  2  hd.  Let- 
tuce @  5c. 

58.  Sell  C.  D.  Fletcher,  219  First  Street,  3  gal.  Maple  Syrup  @  75c,  5  lb.  L.  Starch 
.@  10c,  2  doz.  Lemons  @  25c,  ^  lb.  Eng.  Breakfast  Tea  @  55c,  2  bunches  Radishes  @  10c, 

2  sk..Corn  Meal  @  45c,  collecting  cash. 

Total  and  prove  your  cash  register  entries  and  transfer  $80.00  to  the  safe.  Make  sum- 
mary entries,  write  up  and. test  the  cash  book  without  balancing.  The  cash  debit  will  include 
"total  cash  received." 

Place  and  enter  small  bills  and  fractional,  $15.17,  in  the  cash  register  preparatory  to 
the  next  group  of  transactions. 

59.  Henry  Custer  returns  1  sk.  of  Corn  Meal,  reporting  it  damaged. 

Make  an  entry  in  Custer's  account  pad,  like  the  model  credit  on  page  108,  naming  the 
item  returned  instead  of  Cash,  and  deliver  the  white  sheet  the  same  as  in  a  sale.  Place  a 
ticket  in  the  register  recording  the  value  of  goods  returned,  for  entry  in  the  summary  sheet. 

60.  Sell  S.  L.  Johnson,  119  Second  Street,  for  cash,  18  lb.  Bacon  @  12y2c,  6  lb.  dried 
Apricots  @  15c,  5  lb.  Butter  @  22c,  2  lb.  English  Breakfast  Tea  @  50c,  3  doz.  Lemons  @ 
25c,  3  lb.  Cheese  @  15c,  20  lb.  C  Sugar  @  5c,  30  lb.  Rice  @  10c. 

61.  Pay  cash  for  farm  produce,  $5. 

62.  Buy  the  following  merchandise  on  account,  delivering  an  order  ticket  and  receiving 
the  invoice :  1  box  Hams,  1  brl.  Mess  Pork,  1  box  Bacon. 

Follow  the  usual  routine,  buying  of  the  Harmer  Packing  Co. 
nates  another  firm. 

63.  Sell  John  Thomas,  419  Grand  Avenue,  on  account,  1  bu.  Apples  @  $1.50,  5  lb. 
Butter  @  24c,  12  lb.  G  Sugar  @  6y2c,  1  bu.  Potatoes  @  50c,  2  gal.  Crystal  Syrup  @  35c,  4 
doz.  Eggs  @  18c,  2  lb.  Japan  Tea  @  45c. 

64.  Five  sacks  of  Corn  Meal  purchased  in  Transaction  48  are  unsalable  and  should  be 
charged  back  to  the  firm  who  sold  them  to  you,  and  at  the  price  billed  in  your  invoice. 

Make  entry  in  your  day  book  like  the  form  below. 

DEBIT  FOR  RETURNED  GOODS  IN  SINGLE  ENTRY  DAY  BOOK 


unless  the  teacher  desig- 


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114  NEW  INDUCTIVE  BOOKKEEPING 

Notify  the  firm  and  ask  them  to  give  you  credit  for  the  returned  goods. 

65.  Give  your  check  for  one  month's  rent  of  your  store  room,  $30,  taking  a  receipt. 

Office  Course.    If    you    have    a    Real  Estate  Tablet  Course.    Write  the  check  in  favor  of 

Agency,  make  the  check  payable  to  the  manager  of  J.  Harper,  and  deliver  the  check  through  Outgoing 

the  agency  and  take  his  receipt;  otherwise,  make  Papers.     Take  the  receipt    from    your  Commercial 

the  payment  at  the  Commercial  Exchange,  writing  Exchange  pad. 
the    check    in    favor    of    the    Union   Real   Estate 
Company. 

66.  Sell  Cyrus  Gordon,  422  Fourth  Street,  2  lb.  Mocha  Coffee  @  40c,  25  lb.  A  Sugar 
@  6c,  4  doz.  Eggs  @  18c,  1  bu.  Apples  @  $1.50,  10  cakes  Ivory  Soap  @  5c,  Yi  bu.  Onions 
@  95c,  collecting  cash. 

67.  Sell  Union  Hotel  Co.,  316  Park  Avenue,  on  account,  60  cakes  Ivory  Soap  @  4^2  c, 
25  lb.  Java  Coffee  @  33^c,  50  lb.  Ham  @  12^c,  6  doz.  Lemons  @  20c,  100  lb.  A  Sugar  @ 
5^c,  10  hd.  Cabbage  @  8c,  5  lb.  English  Br.  Tea  @  45c. 

68.  Collect  cash  of  A.  R.  Baker  on  account,  $15. 
Proceed  as  in  Transaction  44. 

69.  Pay  cash  for  sundry  farm  produce,  $2.50. 

70.  Sell  C  D.  Fletcher,  219  First  Street,  3  doz.  Bananas  @  15c,  2  gal.  Crystal  Syrup 
@  45c,  4=y2  lb.  Cheese  @  15c,  20  lb.  Mess  Pork  @  9c,  4  hd.  Cabbage  @  10c,  2  bu.  Onions 
@  95c,  4  hd.  Lettuce  @  5c,  collecting  cash. 

71.  Collect  cash  of  Charles  E.  Gordon  on  account,  $5,  giving  a  receipted  account  slip. 

72.  Sell  A.  R.  Cushman,  116  Ninth  Street,  5  lb.  Grapes  @  12c,  16  lb.  Rice  @  10c,  8 
lb.  Rio  Coffee  @  25c,  4  sk.  Flour  @  75c,  16  lb.  Bacon  @  12^c,  ?0  lb.  G  Sugar  @  6^c,  col- 
lecting cash. 

73.  Deposit  cash  in  bank,  $80. 

Total  and  prove  your  cash  register  entries  and  transfer  all  cash  to  the  safe.  Make  the 
summary  entries,  write  up  and  test  the  cash  book,  and  balance  the  cash  book  preparatory  to 
making  a  statement. 

Test  the  sales  on  account  pads  by  making  a  total  of  the  balances  there  shown  to  com- 
pare with  the  balance  of  Accounts  Receivable  given  in  summary. 

Posting  to  the  Single  Entry  Ledger.  As  explained  on  page  103,  the  single  entry 
ledger  contains  accounts  with  persons  only,  and  when  account  pads  are  used,  the  ledger  will 
only  have  accounts  with  persons  other  than  customers.  In  posting  from  the  day  book  and 
cash  book  to  date,  only  five  ledger  titles  are  required.  Reserve  the  first  seven  divisions  of 
your  ledger  sheet  for  the  general  accounts  that  will  be  introduced,  when  you  change  to  Double 
Entry,  and  begin  your  personal  accounts  with  Wilson  Bros,  on  the  middle  division  of  page 
3,  following  with  the  other  personal  accounts  in  the  order  of  their  first  appearance  in  the 
books.  The  student  will  post  the  debits  and  credits  from  the  day  book  and  cash  book  to  these 
accounts  in  the  usual  manner,  postmarking  all  items  posted,  as  explained  in  preceding  pages. 

The  Single  Entry  Statement.  It  is  now  desired  to  change  the  system  of  bookkeeping 
to  double  entry,  and  preparatory  to  this  step  a  statement  is  required.  The  sources  of  informa- 
tion for  the  statement  in  this  set  are  the  ledger,  cash  book,  and  inventories.  The  following 
are  the  inventories :  Cash  register,  scales,  etc.,  $125,  merchandise  unsold,  $823.11,  rent  pre- 
paid, $25,  and  the  balances  shown  on  the  six  account  pads. 

The  student  may  make  a  statement  like  the  model  form  on  page  115,  using  the  balances 
from  his  cash  book  and  ledger. 

Changing  from  Single  to  Double  Entry.  The  change  from  single  to  double  entry  is 
very  simple,  requiring  only  an  opening  journal  entry,  in  which  are  given  all  titles  and 
amounts  belonging  to  resources  and  liabilities,  with  a  credit  to  the  proprietor  for  the  net 


SET  FOUR— RETAIL  GROCERY  BUSINESS 


115 


A  FORM  OF  SINGLE  ENTRY  STATEMENT 


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worth.  If  the  same  ledger  is  to  be  used,  the  accounts  already  on  the  ledger  will  remain  as 
they  are  and  new  accounts  will  be  opened  for  the  titles  in  the  opening  entry  not  already  in  the 
ledger. 

The  student  may  use  the  same  journal,  placing  the  opening  entry  on  the  next  page  fol- 
lowing the  Single  Entry  day  book.  The  opening  entry  will  be  like  the  following,  except  the 
date,  amounts,  and  proprietor's  name. 

OPENING  JOURNAL  ENTRY— CHANGING  FROM  SINGLE  TO  DOUBLE  ENTRY 


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116 


NEW  INDUCTIVE  BOOKKEEPING 


Posting  and  Trial  Balance.  For  the  sake  of  uniformity,  the  student  may  now  place 
the  titles  in  his  ledger  that  will  be  required  in  addition  to  the  personal  accounts  already  in  the 
ledger :  The  Student,  Proprietor,  at  top  of  page  1 ;  Discount  in  center,  and  Expense  in  lower 
division  of  page  1 ;  Merchandise  in  upper,  Merchandise  forward  in  center,  and  Store  Fix- 
tures in  lower  division  of  page  2 ;  Loss  and  Gain  Closing  in  upper  division  of  page  3. 

Post  the  opening  journal  entry  and  take  a  trial  balance  to  show  that  the  books  are  in 
balance  before  you  make  any  new  entries. 


SINGLE  AND  DOUBLE  ENTRY  COMPARED 

The  student  has  been  told  in  preceding  pages  that  every  business  transaction  involves  a 
debit  (or  debits)  and  a  credit  (or  credits)  for  equal  amounts  in  accounts  related  to  the  busi- 
ness. When  we  record  both  the  debit  and  the  credit,  we  are  keeping  books  by  Double  Entry. 
In  keeping  books  by  the  Single  Entry  method,  we  select  only  the  debits  and  credits  that 
relate  to  persons  and  cash.  Usually  only  one  ledger  entry  is  required  for  each  transaction, 
and  on  this  account  the  system  is  called  Single  Entry. 


tyftttl  E/% 


The  accompanying  diagram  illustrates  the  comparative  scope  of  the  two  systems  in  giv- 
ing a  complete  exhibit  of  the  business.  In  this  diagram  we  represent  Single  Entry  as  a 
partial  circle,  which  usually  includes  only  the  two  segments  or  parts  marked  "Cash"  and 
"Personal." 

An  account  with  the  proprietor  or  accounts  with  the  partners  and  also  Bills  Receivable 
and  Payable  accounts  may  be  kept  in  Single  Entry,  adding  two  more  segments  to  the  circle. 
The  Double  Entry  accounts  are  identical  with  those  of  Single  Entry  so  far  as  the  latter  go, 
but  the  complete  circle  of  information  is  furnished  by  adding  the  segment  containing  ac- 
counts with  property  and  incidental  titles  that  show  the  sources  of  loss  and  gain  of  the 
business. 

The  Single  Entry  system  may  add  other  segments  of  the  circle  and  approach  very  nearly 
to  Double  Entry  by  keeping  a  Merchandise  account  or  an  Expense  account,  but  so  long  as  it 
fails  to  record  every  debit  and  credit  that  relates  to  the  business,  it  cannot  be  termed  Double 
Entry. 


SET  FOUR— RETAIL  GROCERY  BUSINESS 


117 


TRANSACTIONS— CONTINUED 

Before  making  any  cash  transactions,  transfer  $10.45  in  small  bills  and  fractional  from 
your  safe  to  your  cash  register,  recording  the  same  as  usual. 

The  remaining  transactions  in  this  set  will  be  carried  out  in  the  same  manner  as  those 
preceding,  using  Double  Entry  instead  of  Single  Entry  records. 

74.  Sell  E.  A.  Inman,  412  Fourth  Avenue,  20  lb.  C  Sugar  @  5y2c,  6  lb!  Rio  Coffee  @ 
25c,  2  gal.  N.  O.  Molasses  @  50c,  12  lb.  Bacon  @  12y2c,  2  lb.  Y.  H.  Tea  @  45c,  collecting 
cash. 

75.  Sell  Mrs.  M.  J.  Fletcher,  326  Archer  Avenue,  on  account,  40  lb.  A  Sugar  @  5^c, 
2  lb.  Japan  Tea  @  45c,  8  lb.  Butter  @  22>^c,  3  hd.  Cabbage  @  10c,  14  lb.  Bacon  @  12^c,  2 
gal.  Crystal  Syrup  @  45c. 

76.  Buy  the  following  merchandise  on  account,  delivering  an  order  ticket  and  receiving 
the  invoice :  2  cases  Canned  Corn,  1  box  California  Prunes,  1  box  Dried  Apricots,  2  barrels 
Apples. 

Follow  the  usual  routine,  buying  of  the  Fenton  Produce  Co.,  unless  the  teacher  desig- 
nates another  firm. 

Journalize  this  entry  in  the  form  illustrated  in  the  third  entry  on  page  32,  showing  terms  of  dis- 
count allowed. 

77.  Receive  cash  from  John  Thomas  to  apply  on  his  account,  $1 5. 

The  cash  book  will  be  written  up  from  the  check  book  and  cash  register  after  Transaction  87. 

78.  Sell  Henry  Keister,  459  Sixth  Street,  2  lb.  Japan  Tea  @  45c,  15  lb.  Ham  @  14c,  8 
lb.  Grapes  @  12c,  2  sk.  Flour  @  75c,  2  sk.  Corn  Meal  @  45c,  6  hd.  Cabbage  @  10c,  collect- 
ing cash. 

79.  Pay  cash  for  books  and  stationery  for  office  use,  $7.50,  taking  a  receipted  bill  in 
the  usual  manner. 

80.  Sell  to  Union  Hotel  Co.,  316  Park  Avenue,  on  account,  to  be  delivered  at  once,  50 
lb.  Rice  @  9y2c,  20  lb.  Beans  @  4>^c,  40  lb.  C  Sugar  @  5^c,  12  cans  Peaches  @  22^c, 
12*4  lb.  Ham  @  14c,  12  lb.  Java  Coffee  @  33>^c,  5  gal.  Maple  Syrup  @  75c. 

81.  Give  Wilson  Bros,  your  check  for  $100  to  apply  on  account,  taking  a  receipt  as 
usual. 

82.  Sell  Mrs.  John  Leonard,  616  Fifth  Avenue,  10 ^i  lb.  Butter  @  22c,  20  lb.  G 
Sugar  @  6y2c,  4  lb.  Java  Coffee  @  35c,  12  lb.  Mess  Pork  @  9c,  3  bu.  Potatoes  @  50c,  2 
lb.  Cheese  @  15c,  collecting  cash. 

83.  Give  your  check  to  pay  the  invoice  received  in  Transaction  48  less  the  deduction 

in  Transaction  64,  the  balance  being  subject  to  a  discount  of  3  per  cent.     Take  a  receipt  as 

usual. 

Make  a  compound  journal  entry  like  the  following,  and  make  corresponding  cash  entry  when  you 
write  up  your  check  book. 

COMPOUND  JOURNAL  ENTRY  FOR  PAYMENT  WITH  DISCOUNT 


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84.  Sell  A.  R.  Baker,  212  Second  Avenue,  on  account,  to  be  delivered  at  2  p.  m.,  3  doz. 
Oranges  @  25c,  4  lb.  Cheese  @  16c,  2  lb.  Eng.  Breakfast  Tea  @  55c,  6  cans  Peaches  @ 
25c,  12  lb.  Butter  @  23c. 

85.  Pay  cash  for  sundry  produce,  $6. 

Place  a  ticket  in  the  usual  manner  in  the  cash  register. 

86.  Receive  cash  from  Henry  Custer  on  account,  $12. 


118 


NEW  INDUCTIVE  BOOKKEEPING 


87.  Sell  N.  H.  Martin,  424  Third  Street,  6  cans  Peaches  @  25c,  4  sk.  Flour  @  75c,  25 
lb.  A  Sugar  @  6c,  10  lb.  Butter  @  22c,  collecting  cash. 

Total  and  prove  your  cash  register  entries  and  transfer  all  cash  to  the  safe  except 
$13.06  for  making  change.     Complete  your  summary  entries  in  the  usual  manner. 

Write  up  your  cash  book  on  the  double  entry  plan  illustrated  on  pages  34  and  35 
crediting  Mdse.  with  the  cash  sales  and  with  cash  received  from  sales  on  account  all  in  one 
amount. 

The  cash  payments  for  proceeds  of  invoice  discounted  in  Transaction  83  will  be  entered 
in  the  Double  Entry  cash  book  as  follows : 

CASH  CREDIT  CHECKED  FROM  COMPOUND  JOURNAL  ENTRY 


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Merchandise  Credits.  Two  methods  are  followed  by  accountants  in  disposing  of 
merchandise  sales,  one  of  which  has  been  illustrated  in  preceding  sets.  In  a  retail  business 
where  there  are  frequent  sales  on  account,  many  business  firms  credit  Merchandise  only  with 
the  cash,  notes  and  other  property  received  for  Merchandise,  and  consider  the  sales  on  ac- 
count as  not  fully  completed  until  payment  is  made,  at  which  time  the  amount  received  will  be 
credited  to  Merchandise.  The  student  will  follow  the  latter  plan  in  the  present  Set,  crediting 
Merchandise  both  for  cash  sales  and  for  cash  received'  from  previous  sales  on  account. 

TRANSACTIONS— CONTINUED 

Record  the  balance  in  the  cash  register  on  the  next  record  sheet  in  the  usual  manner. 

88.  Sell  E.  H.  Preston,  195  Second  Avenue,  5  doz.  Eggs  @  18c,  y2  bu.  Apples  @ 
$1.50,  2  bu.  Potatoes  @  50c,  5  cakes  Ivory  Soap  @  5c,  5l/2  lb.  Butter  @  22c,  12  lb.  G  Sugar 
@  6y c,  collecting  cash. 

89.  Sell  to  Chas.  E.  Gordon,  617  Fifth  Avenue,  on  account,  to  be  delivered  before  2 
p.  m.,  4  gal.  N.  O.  Molasses  @  44c,  2  bu.  Potatoes  @  55c,  4  lb.  Prunes  @  12y2c,  y2  doz. 
Lemons  @  25c,  12  lb.  G  Sugar  @  6^c,  3  doz.  Eggs  @  18c,  5  lb.  Rice  @  15c. 

90.  Give  your  check,  favor  of  C.  C.  Lane,  for  $8,  to  pay  for  clerk  hire. 

Write  at  the  bottom  of  the  check  to  the  left  of  your  signature,  "For  clerk  hire,"  and  take  no 
receipt. 

91.  Receive  a  check  from  the  Union  Hotel  Co.  to  apply  on  their  account,  $53. 
Proceed  as  in  Transaction  44. 

92.  Sell  T.  R.  Rich,  482  Fourth  Avenue,  6  lb.  Java  Coffee  $  35c,  2  doz.  Oranges  @ 
25c,  15  lb.  Mess  Pork  @  9c,  2  sk.  Flour  @  75c,  4  lb.  Prunes  @  12>4c,  6  cans  Corn  @ 
16 y,c,  collecting  cash. 

93.  Buy  the  following  merchandise  on  account,  delivering  an  order  ticket  and  receiving 
the  invoice :    1  brl.  G  Sugar,  1  brl.  A  Sugar,  1  brl.  Crystal  Syrup,  1  chest  Japan  Tea. 

Follow  the  usual  routine,  buying  of  Dalton  &  White,  unless  the  teacher  designates  an- 
other firm. 

94.  Sell  John  Thomas,  419  Grand  Avenue,  on  account,  to>  be  delivered  at  once,  6  lb. 
Bacon  @  13c,  3  lb.  Apricots  @  17c,  */a  bu.  Apples  @  $1.50,  ±y2  lb.  Butter  @  20c,  2  lb. 
Mocha  Coffee  @  40c,  25  lb.  A  Sugar  @  6c,  2  gal.  Maple  Syrup  @  75c,  y2  bu.  Turnips  @ 
85c. 

95.  Receive  cash  from  A.  R.  Baker  to  apply  on  his  account,  $5. 

96.  Pay  cash  for  sundry  produce,  $4. 

97.  Sell  to  Henry  Custer,  399  Center  Street,  on  account,  to  be  delivered  before  3  p.  m., 
4  bu.  Potatoes  (5)  55c,  4  hd.  Cabbage  <p)  4,y2c  10y2  lb.  Ham  @  14c,  2  doz.  Lemons  @  25c, 
2  sk.  Flour  @  75c,  24  lb.  C  Sugar  @  5>?c,  V2  lb.  English  Br.  Tea  @  50c,  4  doz.  Eggs  @ 
17c. 

Receive  from  him  a  check  for  $7  on  account. 


SET  FOUR— RETAIL  GROCERY  BUSINESS  119 

98.  Deposit  in  bank,  $150,  taking  the  cash  in  safe  and  two  checks  from  register  to  make 
up  the  given  total.     Enter  the  amount  taken  from  register  in  "Cash  Payments"  column. 

99.  C.  E.  Gordon  reports  an  overcharge  on  sales  in  Transaction  89.  The  Rice  should 
have  been  billed  at  10c  per  lb.  instead  of  15c  per  lb. 

100.  Pay  cash  for  sundry  produce,  $5. 

101.  Give  your  check  to  pay  invoice  received  in  Transaction  62  less  a  discount  of  5 
per  cent.    . 

102.  Sell  Mrs.  E.  M.  Sawyer,  419  Third  Street,  15  lb.  C  Sugar  @  5^c,  6  lb.  Bacon 
@  5c,  5  lb.  Rio  Coffee  @  25c,  2  gal.  Crystal  Syrup  @  45c,  2  doz.  Bananas  @  15c,  1  lb.  Y. 
H.  Tea  @  50c,  collecting  cash. 

Total  and  prove  your  cash  register  entries  and  retain  all  cash  for  making  change.  Com- 
plete your  summary  entries  in  the  usual  manner. 

Write  up  your  cash  book  and  journal  and  test  your  cash  book,  without  balancing. 
Record  the  balance  in  the  cash  register  in  the  usual  manner. 

103.  Sell  C.  E.  Gordon,  199  Third  Street,  4  bu.  Potatoes  @  50c,  2  bu.  Turnips  @  75c, 
5  lb.  L.  Starch  @  10c,  16  lb.  Bacon  @  12^c,  12  cans  Corn  @  162/3c,  5  doz.  Eggs  @  19c, 
5  lb.  Coffee  @  26c,  receiving  his  check. 

104.  Give  your  check  to  pay  the  invoice  received  in  Transaction  76,  less  the  usual  dis- 
count of  2  per  cent. 

105.  Pay  cash  for  sundry  produce,  $6. 

106.  Receive  cash  from  Mrs.  M.  J.  Fletcher' to  apply  on  her  account,  $5. 

107.  Buy  the  following  merchandise  on  account,  delivering  an  order  ticket  and  re- 
ceiving the  invoice :   15  sacks  Corn  Meal,  25  sacks  Flour,  1  case  Oat  Meal. 

Follow  the  usual  routine,  buying  of  the  Western  Milling  Co.,  unless  the  teacher  desig- 
nates another  firm. 

108.  Sell  the  Union  Hotel  Co.,  316  Park  Avenue,  on  account,  to  be  delivered  at  once, 
25  lb.  Butter  @  19c,  6  doz.  Eggs  @  18c,  5  bu.  Potatoes  @  55c,  100  lb.  C  Sugar  @  5^c,  6 
lb.  Mocha  Coffee  @  37c,  10  lb.  Raisins  @  12^ c,  8  lb.  Cheese  @  15c. 

109.  Give  your  check  to  Wilson  Bros,  for  $25  to  apply  on  account,  taking  a  receipt. 

110.  Sell  C.  E.  Peters,  498  First  Avenue,  16  lb.  Ham  @  14c,  5  lb.  Apricots  @  15c,  3 
doz.  Lemons  @  25c,  2  sk.  Corn  Meal  @  45c,  4  pa.  Rolled  Oats  @  9c,  receiving  his  check. 

111.  Pay  cash  for  sundry  produce,  $3. 

112.  Sell  A.  R.  Baker,  212  Second  Street,  on  account,  to  be  delivered  before  3  p.  m., 
8y2  lb.  Ham  @  14c,  4  pa.  Rolled  Oats  @  10c,  4  cans  Peaches  @  25c,  2  doz.  Eggs  @  18c, 
24  lb.  A  Sugar  @  6%c,  2  sk.  Flour  @  75c. 

113.  Deposit  cash  in  bank,  $25.25,  including  the  two  checks  received  today. 

114.  Sell  Mrs.  M.  J.  Fletcher,  326  Archer  Avenue,  on  account,  to  be  delivered  before 
2  p.  m.,  2  doz.  Bananas  @  15c,  3  lb.  Laundry  Starch  @  8^c,  6  lb.  Java  Coffee  @  33 */$c,  2 
gal.  N.  O.  Molasses  @  40c,  10  lb.  Beans  @  4ty2c,  6  lb.  Bacon  @  12y2c,  3  doz.  Eggs  @  18c, 
2  lb.  Raisins  @  12c. 

115.  Pay  cash  for  cleaning  floors  of  store  room,  $1.50. 

116.  Sell  Mrs.  J.  G.  Vance,  192  Third  Avenue,  6  lb.  Java  Coffee  @  35c,  8  lb.  Rice  @ 
10c,  4  gal.  N.  O.  Molasses  @  50c,  12  lb.  Mess  Pork  @  lie,  collecting  cash. 

•  Total  and  prove  your  cash  register  entries  and  retain  all  cash  in  the  register  for  making 
change.  Complete  your  summary  entries  in  the  usual  manner.  Write  up  your  cash  book 
and  journal  and  test  and  balance  your  cash  book.  Record  the  balance  in  the  cash  register 
in  the  usual  manner. 

Post  your  ledger  and  take  a  trial  balance.  Make  a  statement  of  your  business  using  the 
following  inventories :  Merchandise  unsold,  $961.05,  the  accounts  receivable  at  the  balance 
shown  on  your  last  summary,  store  fixtures,  $120,  rent  prepaid,  $10.  Follow  the  form  of 
double  entry  statement  given  on  pages  39  and  41. 

By  comparing  this  statement  with  the  single  entry  statement  made  before  changing  to 
double  entry,  the  student  will  observe  the  advantage  of  double  entry  over  single  entry,  in  the 
more   complete   information   given.      Each  form  of  statement    gives    an   exhibit  of  the  re- 


120  NEW  INDUCTIVE  BOOKKEEPING 


sources  and  liabilities,  but  the  single  entry  statement  fails  to  give  the  sources  of  losses  and 
gains,  which  are  given  complete  in  the  double  entry  statement. 

117.  Sell  John  Thomas,  419  Grand  Avenue,  on  account,  to  be  delivered  at  once,  4  hd. 
Lettuce  @  5c,  2  bunches  Radishes  @  10c,  1  bu.  Apples  @  $1.25,  iy2  lb.  Ham  @  15c.  3  doz. 
Eggs  @  18c,  5  lb.  Butter  @  22c,  14  lb.  G  Sugar  @  6y2c. 

118.  Give  Wilson  Bros,  your  check  for  $75  to  apply  on  account,  taking  a  receipt  as 
usual. 

119.  Sell  James  Armstrong,  127  Third  Street,  20  lb.  A  Sugar  @  6c,  6  cans  Peaches 
@  25c,  2  lb.  Japan  Tea  @  45c,  ^/2  lb.  Butter  @  22c,  3  lb.  Prunes  @  12^c,  2  hd.  Cabbage 
@  10c,  collecting  cash. 

120.  Collect  cash  from  Mrs.  M.  J.  Fletcher,  in  full  of  account,  entering  on  the  sale  slip 
that  has  the  balance  forward,  "Paid  in  full,"  with  the  current  date  and  your  signature.  De- 
liver the  receipted  slip  in  the  usual  manner,  keeping  the  duplicate  in  the  account  pad. 

121.  Pay  cash  for  sundry  produce,  $3. 

122.  Sell  Cyrus  Upton,  498  First  Avenue,  50  lb.  C  Sugar  @  5>4c,  10  lb.  Rio  Coffee 
@  24c,  1  lb.  Y.  H.  Tea  @  45c,  12^  lb.  Ham  @  14c,  ]/2  bu.  Apples  @  $1.50,  collecting 
cash. 

123.  Give  your  check  to  the  Michigan  Furniture  Co.  for  $18  to  pay  for  an  office  desk. 

124.  Collect  cash  from  A.  R.  Baker  in  full  of  account,  giving  a  receipted  sale  slip,  the 
same  as  in  Transaction  120. 

125.  Sell  Henry  Custer,  399  Center  Street,  on  account,  3  hd.  Cabbage  @  lie,  1  bu. 
Potatoes  @  50c,  2  hd.  Lettuce  @  5c,  25  lb.  A  Sugar  @  6c,  3  doz.  Eggs  (5)  18c,  1  sack  Corn 
Meal  @  45c,  10  lb.  Pork  @  12c,  2  doz.  Bananas  @  15c. 

126.  Deposit  cash  in  bank,  $50. 

127.  Give  your  check  to  pay  the  invoice  received  in  Transaction  93,  less  a  discount  of 
2  per  cent,  taking  a  receipt  as  usual. 

128.  Pay  cash  for  sundry  produce,  60c. 

129.  Sell  the  Union  Hotel  Co.,  316  Park  Avenue,  on  account,  12  doz.  Eggs  @  18c,  40 
lb.  Butter  @  20c,  10  bu.  Potatoes  @  50c.  Receive  cash  from  the  Union  Hotel  Co.,  in  full 
of  account,  including  above  sale.  Deliver  the  sale  slip,  including  the  above  item,  receipted  in 
full. 

130.  Sell  N.  H.  Martin,  424  Third  Street,  2  doz.  Eggs  @  18c,  4  gal.  Maple  Syrup  @ 
75c,  12  lb.  Bacon  @  12y2 c,  4  lb.  Java  Coffee  @  35c,  24  lb.  A  Sugar  @  6c,  collecting  cash. 

131.  Pay  A.  R.  Gordon  cash  for  delivering  merchandise,  $2.50.  No  receipt.  (Ex- 
pense.) 

Total  and  prove  your  cash  register  entries  and  retain  all  cash  for  making  change. 

Complete  your  summary  entries  in  the  usual  manner." 

Write  up  your  cash  book  and  journal  and  prove  your  cash  balance. 

Record  your  balance  in  the  cash  register,  on  new  sheet,  ready  for  advance  transactions. 

132.  Sell  T.  R.  Rich,  482  Fourth  Avenue.  y2  bu.  Turnips  @  75c,  4  lb.  Cheese  @  15c, 
2  sk.  Corn  Meal  @  45c,  4  lb.  Prunes  @  12^c,  5  lb.  Butter  @  22c,  20  lb.  G  Sugar  @  6^c, 
collecting  cash. 

133.  Pay  cash  for  sundry  produce,  $3. 

134.  Collect  cash  of  John  Thomas  in  full  of  account,  giving  a  receipted  sale  slip  as 
usual. 

135.  Deposit  cash  in  bank,  $25. 

136.  Give  your  check  to  pay  the  invoice  received  in  Transaction  107,  less  a  discount 
of  3  per  cent,  taking  a  receipt. 

137.  Sell  E.  M.  Webster,  212  Fourth  Street,  15  lb.  G  Sugar  @  6^c,  2  sk.  Flour  @ 
75c,  12  lb.  Ham  @  14c,  4  lb.  Cheese  (S>  15c,  collecting  cash. 

138.  Sell  Charles  E.  Gordon,  617  Fifth  Avenue,  on  account,  to  be  delivered  at  1  p.  m.. 
25  lb.  A  Sugar  @  6c,  5  lb.  Java  Coffee  @  31c,  10  lb.  Rice  @  10c,  1  brl.  Apples  @  $3.25. 

139.  Make  a  small  sale,  receiving  cash  for  same,  21  cents. 

140.  Pay  cash  for  sundry  produce,  $2. 

141.  Collect  cash  of  Charles  E.  Gordon  in  full  of  account,  giving  a  receipted  sale  slip. 


SET  FOUR— RETAIL  GROCERY  BUSINESS  121 

142.  Sell  W.  C.  Norton,  213  Third  Avenue,  3  lb.  Java  Coffee  @  35c,  2  gal.  Maple 
Syrup  @  75c,  1  lb.  Eng.  Breakfast  Tea  @  55c,  12  lb.  G  Sugar  @  6^2C,  y?.  bu.  Apples  @ 
$1.50;  10y2  lb.  Mess  Pork  @  9c,  2  hd.  Cabbage  @  10c,  collecting  cash. 

143.  Collect  cash  of  Henry  Custer  in  full  of  account,  giving  a  receipted  sale  slip. 

144.  Prove  the  cash  register,  transfer  all  cash  to  safe,  and  make  summaries  as  usual. 

145.  Sell  your  office  desk  for  $11.85,  receiving  currency. 
Place  this  money  in  the  safe  and  enter  at  once  in  the  cash  book. 

146.  Sell  the  remaining  merchandise  and  other  assets  to  John  C.  Jones,  receiving  his 
check  in  settlement.  The  merchandise  is  valued  at  $860,  the  store  fixtures  at  $90,  and  rent 
prepaid  at  $10. 

Make  three  entries  in  the  cash  book. 

147.  Deposit  the  check  received  in  Transaction  146  and  $41.14  in  currency. 

148.  Give  Wilson  Bros,  a  check  in  full  of  account,  taking  a  receipt  in  full. 

149.  Write  up  your  cash  book  and  journal  and  test  your  cash  balance. 
Post  your  ledger,  balance  cash,  and  take  a  trial  balance. 

150.  Leave  your  pass  book  at  bank  to  be  balanced,  or  call  for  a  bank  statement  of  your 
cancelled  checks. 

Verify  your  bank  statement,  comparing  the  returned  checks  with  the  corresponding  stub 
entries  in  your  check  book. 

File  away  your  paid  checks  which  should  be  carefully  kept  as  receipts  or  vouchers  to  prove  pay- 
ments that  may  be  called  in  question  at  a  later  date. 

Make  a  statement  or  balance  sheet  and  close  your  ledger  without  inventories,  bring  down 
your  present  worth  in  your  investment  account,  which  should  agree  with  your  cash  balance. 

Deliver  the  contents  of  "Outgoing  Papers"  with  a  list  of  same  to  the  teacher,  and  make 
a  report  of  the  cash  you  have  on  hand  and  in  bank.  Deliver  the  contents  of  your  other  filing 
cases  to  the  teacher  with  a  list  of  papers  in  each. 

GENERAL  REVIEW  QUIZ 

1.  What  blank  books  are  commonly  used  in  Single  Entry? 

2.  Explain  the  use  of  the  cash  sale  pad. 

3.  How  may   four  amount  columns  be  used  in  the  cash  register? 

4.  Explain  the  use  of  the  summary  book. 

5.  How  are  entries  made  in  the  cash  book  from  the  cash  register? 

6.  Explain  the  use  of  the  charge  sale  ticket. 

7.  How  are  the  books  changed  from  Single  to  Double  Entry  ? 

8.  What  is  the  difference  between  Single  and  Double  Entry? 

9.  To  what  lines  of  business  is  Single  Entry  especially  adapted? 
10.  Describe  two  methods  of  making  merchandise  credits. 


Supplementary  Journalizing  Drills 

These  and  subsequent  journalizing  drills  have  been  prepared  as  a  basis  for  either  written 
or  oral  recitation.  The  teacher  may  require  them  to  be  written  with  pen  and  ink  in  regular 
journal  entry  form,  with  proper  explanation,  the  student  using  regularly  ruled  journal  paper; 
or  he  may  require  the  journalizing  to  be  given  in  the  "Skeleton  Journal"  form,  that  is,  the 
account  titles  and  amounts  being  recorded  without  explanations.  In  the  latter  case  the  jour- 
nalizing may  be  done  with  pencil  on  ordinary  blank  paper. 

The  numbers  preceding  the  transactions  may  be  treated  as  dates  for  the  month  and  year., 
given,  in  case  journal  entries  are  written  up  in  correct  form. 


Drill  No.  1 

CASH,  MERCHANDISE  AND  PERSONAL  ACCOUNTS 

Throughout  these  Drills  the  student  should  bear  in  mind  that  in  practical  bookkeeping 
but  few  of  the  transactions  given  would  be  actually  recorded  in  the  Journal,  but  in  the  Cash 
Book,  Sales  Book,  or  other  specialized  books  that  modern  accountants  have  devised  for  the 
purpose  of  lessening  their  labors.  As  previously  indicated,  the  purpose  of  the  Journalizing 
Drills  is  to  train  the  student  to  perceive  readily  the  debits  and  credits  arising  from  the  vari- 
ous classes  of  business  transactions.  The  question  as  to  the  number  and  kind  of  the  books 
to  be  used  in  forming  the  accounting  records  of  a  business,  is  one  that  will  depend  upon  the 
nature  of  the  business,  and  is  usually  determined  by  an  accounting  specialist.  Its  considera- 
tion is  not  appropriate  to  an  elementary  treatise,  and  is,  therefore,  omitted  in  this  work. 

TRANSACTIONS  FOR  JOURNALIZING,  DECEMBER,  19— 


1.  Sold  R.  Miller  on  account,  Mdse.,  per 
bill  rendered,  $21.40. 

2.  Sold  C.  H.  Dalton  for  cash,  Mdse., 
$35.90. 

3.  Gave  James  Bell  currency  in  payment 
for  Mdse.,  per  bill  this  date,  $65. 

4.  Received  of  C.  P.  Hammond  currency 
on  account,  $50. 

5.  Received  of  H.  Martin  to  apply  on 
account,  155  lbs.  of  butter  at  20c. 

6.  Handed  Harlan  &  Son  our  check  for 
$75  to  apply  on  account. 

7.  Received  of  D.  F.  Mundell  his  certi- 
fied check  for  $100  to  apply  on  account. 

8.  Sold  to  T.  M.  Brown  groceries  per 
bill  rendered,  $24.90.  Mr.  Brown  hands  us 
in  payment  his  order  for  cash  on  Moore 
Bros. 

Note. — The  bookkeeper  would  here  charge  Cash, 
assuming  that  the  order  will  be  paid  on  presenta- 
tion. The  procedure  to  be  taken  in  default  of  such 
payment  will  be  discussed  later  under  "Correction 
Entries." 

9.  We  have  handed  Mclntire  &  Jones 


our  check  on  the  Merchants  Bank  for  $25  to 
apply  on  account. 

10.  Delivered  to  Henry  Hope  5  brl. 
flour  at  $4.50,  to  apply  on  our  account. 

11.  Bought  of  George  H.  Daly  &  Co., 
150  bu.  potatoes  at  40c;  gave  in  payment 
our  check  on  Farmers  Bank. 

12.  Sold  to  Richard  Lane  15  cases  eggs 
at  $2.50,  receiving  in  payment  his  check  on 
Merchants  Bank. 

13.  We  have  received  from  Eugene 
Herbert  &  Co.,  St.  Louis,  on  account  at  60 
days,  shipment  of  groceries  per  bill  of  Dec. 
1,  $224.40. 

14.  We  have  handed  to  L.  Miller  for  R. 
Cook  &  Co.,  currency  $50  and  our  check  for 
$67.50,  to  balance  their  account  to  date. 

Note.— The  explanatory  record  should  always 
show  complete  data  for  all  payments  made  or  re- 
ceived. Neglect  of  this  may  give  rise  to  vexations, 
disputes  or  even  litigation. 

15.  Sold  to  Chas.  Nelson  on  account  at 
30  days,  Mdse.,  per  bill  rendered  this  date, 
$65.45. 


—122— 


JOURNALIZING  DRILLS 


123 


16.  Henry  James  &  Co.  have  remitted 
their  check  for  invoice  of  goods  sold  them 
Dec.  10  on  account,  amounting  to  $121.50. 

17.  John  Carter  has  settled  his  account 
to  date  with  currency,  $21,  and  his  check  for 
balance,  $28.15. 

18.  Chas.  Thornton  has  sold  to  us,  to 
apply  on  account,  15  bu.  turnips  at  20c,  and 
18  dozen  eggs  at  25c. 


Note. — Endeavor  to  get  results  mentally  in  trans- 
actions like  the  last  one. 

19.  J.  B.  Carterlin  has  handed  us  a  cash 
order  on  Vinton  &-Wright  for  $28.75  in  set- 
tlement of  his  account  to  date.  ( Note  trans- 
action 8. ) 

20.  We  have  shipped  to  Fillmore  Bros., 
Chicago,  to  apply  on  account,  25  brl.  Ben 
Davis  Apples  at  $2.50. 


Drill  No.  2 

LOSS  AND  GAIN  AND  PROPRIETORS'  ACCOUNTS 

The  general  Loss  and  Gain  account  is  for  losses  or  gains  that  cannot  be  properly  in- 
cluded under  Expense,  Interest,  Discount,  or  the  other  special  loss  and  gain  accounts.  The 
general  Loss  and  Gain  account  is  debited  for  all  losses,  and  credited  for  all  gains  not  provided 
for  in  other  accounts. 

Accounts  with  the  proprietor  (or  with  the  partners,  if  the  business  is  a  partnership)  are 
kept  like  any  other  personal  accounts,  the  proprietor  being  debited  for  all  that  he  receives 
from  the  business,  and  credited  for  all  that  he  contributes.  Two  accounts,  however,  are 
usually  kept  with  the  proprietor  (or  with  each  partner),  the  investment  account  and  the  per- 
sonal account.  The  proprietor's  investment  account  shows  his  original  investment,  and  addi- 
tions to  it  or  withdrawals  from  it,  also  the  entries  for  losses  or  gains  at  the  close  of  any  busi- 
ness period.  The  proprietor's  personal  account  is  used  for  items  of  debit  or  credit  not  suf- 
ficiently important  to  affect  the  investment  account,  as  purchases  of  merchandise,  or  allow- 
ances of  cash  for  living  expenses,  etc.  The  amount  that  the  respective  partners  are  permitted 
to  withdraw  from  the  business  for  this  purpose  may  be  determined  by  mutual  agreement,  or 
the  matter  may  be  adjusted  by  allowing  a  fixed  salary  to  each  partner.  In  the  following 
Drill  the  student  will  use  his  best  judgment  as  to  whether  the  transactions  given  affect  the 
proprietor's  personal  or  investment  accounts. 

TRANSACTIONS  FOR  JOURNALIZING,  JANUARY,  19— 

1.  A  robber  entered  the  store  and  took 
from  the  till,  currency  amounting  to  $81.85. 

2.  A  note  for  $72.90,  purporting  to  be 
given  by  Cook  &  Co.,  and  assigned  to  us  by 
Robert  Steele,  proves  to  be  a  forgery.  Steele 
has  absconded  and  the  note  is  a  loss. 

3.  We  have  received  from  the  Bright- 
ville  Street  Fair  Association,  a  prize  of  $100 
in  cash  for  the  best  decorated  store  window. 

4.  Arthur  Miller,  partner,  has  been  al- 
lowed to  withdraw  a  portion  of  his  invest- 
ment, amounting  to  $250,  and  has  received 
the  firm's  check  for  same. 

Note. — The  titles  of  proprietor's  investment  and 
personal  accounts  are  indicated  as  follows:  "Ar- 
thur Miller,  Investment,"  "Arthur  Miller,  Per- 
sonal." 

5.  The  firm  has  assumed  payment  of  a 
note  for  $575  given  by  James  Moore,  part- 
ner and  secured  by  mortgage  on  his  town 
property.  Mr.  Moore  is  to  make  all  interest 
payments. 

6.  We  have  discovered  a  counterfeit 
twenty  dollar  bill  in  the  cash  drawer,  the 
source  of  which  cannot  be  traced. 


7.  Through  a  fire  which  broke  out  in  the 
basement,  canned  goods  to  the  value  of 
$65.50  have  been  entirely  destroyed.  No 
insurance. 

Note. — No  rules  can  be  laid  down  for  determin- 
ing practically,  to  what  extent  the  Loss  and  Gain 
Accounts  should  be  used  to  show  incidental  or  un- 
usual losses  of  this  character.  Probably,  as  a  rule, 
no  journal  entry  would  be  made,  the  loss, 
especially  if  inconsiderable,  being  left  to  show 
itself  in  reduced  inventories  at  the  end  of  the  year. 
If,  however,  it  is  desired  to  show  a  strictly  ac- 
curate record  of  the  sources  of  all  the  losses  and 
gains  of  the  business,  the  Loss  and  Gain  account 
should  show  all  items  of  the  character  of  those 
given  in  the  Drill. 

8.  B.  F.  Nelson,  partner,  withdraws  cash 
for  personal  expenses,  $50. 

9.  An  error  has  been  discovered  in  the 
computation  of  rentals  of  our  store  building, 
previously  paid  and  charged  to  the  Expense 
account,  which  has  been  corrected  by  our  re- 
ceiving a  check  in  rebate  from  the  owners 
for  $27.15. 

10.  In  accordance  with  an  amendment  to 
the  partnership  contract,  A.  J.  Monroe,  part- 
ner, has  increased  his  investment  in  the  busi- 


124 


NEW  INDUCTIVE  BOOKKEEPING 


ness  by  assigning  to  the  firm  a  note  in  his 
favor  for  $1500,  secured  by  a  first  mortgage 
on  property  at  256  Water  St.,  which  is  re- 
ceived by  the  firm  at  its  par  value. 

11.  There  is  a  debit  balance  of  $61.50 
on  our  books  against  the  account  of  C.  W. 
Chase,  recently  deceased.  The  administra- 
tor of  his  estate  reports  that  there  is  no  prop- 
erty available  for  the  payment  of  the  debt 
and  we  lose  the  amount. 

12.  Sold  A.  J.  Monroe,  partner,  a  bill  of 
Mdse.  amounting  to  $36.90,  on  his  personal 
account. 

13.  Henry  Nelson,  father  of  B.  F.  Nel- 
son, partner,  has  made  a  free  gift  to  the 
firm,  of  an  office  safe,  valued  at  $350. 

14.  A.  M.  Chase,  a  brother  of  C.  W. 
Chase,  deceased,  has  called  and  handed  us 
his  check  for  $61.50,  the  amount  of  the  bal- 
ance against  his  brother's  account,  which 
was  recently  passed  to  the  Loss  and  Gain 
account. 

15.  Our  note  for  $650  in  favor  of  A.  C. 
Scott  has  been  presented  for  payment.  The 
firm,  lacking  funds  at  this  time  for  the  ad- 
justment of  the  obligation,  payment  is  made 


by  A.  J.  Monroe,  partner,  who  turns  over 
the  cancelled  note,  and  receives  credit  for 
same. 

16.  Our  coal  shed  at  the  rear  of  the  store 
has  been  destroyed  by  fire,  and  we  lost  five 
tons  of  coal,  previously  purchased  for  office 
use,  at    $6.75  per  ton. 

17.  It  has  been  discovered  that  the  coun- 
terfeit twenty  dollar  bill  recently  found  in 
our  cash  drawer  (Transaction  January  6) 
was  paid  to  us  by  the  Mason  Hardware 
Co.,  and  they  have  given  to  us  a  good  bill  in 
its  place. 

18.  B.  F.  Nelson,  partner,  has  accom- 
modated the  firm  with  two  tons  of  coal  for 
office  use  from  his  own  cellar,  price  $7.25 
per  ton,  which  is  credited  to  his  personal 
account. 

19.  Thieves  broke  into  the  store  and 
made  way  with  fancy  groceries,  value  esti- 
mated at  $250. 

20.  S.  Moore  reports  an  error  in  our 
favor  of  $11.45  in  expense  account  previ- 
ously submitted  by  him,  and  which  was  paid 
by  us  in  cash,  remitting  us  Chicago  draft  for 
amount  of  the  error. 


Drill  No.  3 

BILLS  PAYABLE,  BILLS  RECEIVABLE,  AND  INTEREST 

.The  term  "Bills,"  as  here  used,  includes  all  promissory  obligations  to  pay  money,  as 
notes,  accepted  drafts,  etc.  "Bills  Payable"  comprise  the  written  obligations  of  the  pro- 
prietor or  firm.  "Bills  Receivable"  include  the  written  obligations  of  others,  the  title  of 
which  rests  in  the  proprietor  or  firm.  The  Interest  account  is  one  of  the  "loss  and  gain"  ac- 
counts. It  affords  a  record  of  all  interest  paid  or  allowed  on  the  accounts  or  written  obliga- 
tions of  the  proprietor,  and  of  all  interest  allowances  or  payments  from  others  to  him.  All  in- 
terest received  is  a  direct  gain  to  the  business ;  all  paid  out  is  a  loss. 

SPECIAL  JOURNALIZING  RULES 

(a)  The  Bills  Receivable  account  is  debited  when  any  bill  receivable  comes  into  our 
possession ;  and  credited  when  one  is  paid  in  whole  or  in  part,  or  otherwise  disposed  of. 

(b)  The  Bills  Payable  account  is  debited  when  our  own  written  obligations  are  paid 
in  whole  or  in  part ;  and  credited  when  we  deliver  them  to  others. 

(c)  The  Interest  account  is  debited  for  all  interest  paid  or  allowed  by  us  on  our  own 
accounts  or  written  obligations ;  and  credited  when  interest  is  paid  or  allowed  by  others  to  us. 

TRANSACTIONS  FOR  JOURNALIZING,  FEBRUARY,  19— 

1.  Sold  to  Chas.  Vinton  on  his  note  at 
30  days,  Mdse.  per  bill  rendered,  $85.90. 
(a). 

2.  Adjusted  our  account  with  Wilson  & 
French  by  giving  our  note  at  90  days  for 
balance,  $146.50.      (b). 


3.  Received  from  Walter  Drew  his 
check  on  Merchants  Bank  for  $75  to  apply 
on  his  note  of  Jan.  10,  19 — .     (a). 


4.  Bought  Mdse.  of  Carter,  Stone  &  Co., 
per  invoice  of  this  date,  giving  our  note  at 
60  days  in  payment  of  same,  $145.15.     (b). 

5.  Venable  &  Co.  have  adjusted  their 
account  to  date  by  handing  us  their  90  day 
note  for  $175.20. 

6.  Chas.  Miller  has  handed  us  his  check 
for  $15.40  in  payment  of  interest  to  date  qii 
his  note  of  Jan.  5,  19 — .      (c). 


JOURNALIZING  DRILLS 


125 


7.  We  have  paid  to  Esterbrook  &  Son 
$75  in  currency  to  apply  on  our  note  of  May 
6,19—.     (b). 

8.  S.  Davis  has  assigned  to  us,  to  apply 
on  his  account,  John  Markharm's  note  in  his 
favor  for  $50  without  interest,  and  given 
March  7  last. 

9.  Received  of  George  Moore,  12  bu. 
potatoes  at  35c,  to  be  applied  to  the  payment 
of  accrued  interest  on  his  note  of  Feb.  8 
last. 

10.  W.  H.  Scott  gives  us  a  cash  order 
on  A.  C.  Hamlin  &  Co.  for  $25  to  apply  on 
his  note  of  July  2  last. 

11.  Gave  Miller  &  Stone  our  check  for 
$27.10  to  pay  accrued  interest  on  our  note, 
their  favor  of  Oct.  15  last. 

12.  C.  L.  Mason  has  given  us  his  note 
at  60  days  in  payment  of  a  bill  of  Mdse. 
amounting  to  $84.20  sold  him  on  Dec.  6 
last,  charged  to  his  account  on  that  date. 

13.  Harvey  Brown  has  handed  us  his 
check  for  an  amount  sufficient  to  pay  ac- 
crued interest  at  6  per  cent  on  his  note  of 
$500  in  our  favor  issued  8  months  ago. 

Note. — In  the  interest  and  discount  computa- 
tions in  this  book,  days  of  grace  are  not  considered. 


14.  Fred  Holmes  has  given  us  his  30 
day  note  for  $41.50  to  adjust  accrued  in- 
terest on  his  note  in  favor  of  Jones  &  Davis, 
which  was  assigned  to  us  Jan.  15  last. 

15.  We  have  assigned  Robert  Watson's 
note  of  Nov.  16,  19 — ,  our  favor,  for  $150, 
without  interest,  to  H.  Stevens  &  Sons  to 
apply  on  our  account. 

16.  M.  A.  Phillips  has  presented  to  us, 
to  be  applied  on  his  account,  our  note  of  Oct. 
6,  19 — ,  for  $75,  in  favor  of  T.  C.  Stewart 
and  assigned  by  the  latter  to  Mr.  Phillips. 

17.  We  have  handed  to  C.  F.  Allen  & 
Co.  our  note  at  30  days,  in  payment  for  an 
invoice  of  Mdse.  on  account,  amounting  to 
$176.90  and  billed  Nov.  17,  19—. 

18.  Received  of  C.  Walker  on  account, 
60  lb.  honey  at  15c,  and  56  lb.  poultry  at 

i2.yac. 

19.  J.  P.  Wilder  has  settled  his  account, 
amounting  to  $249.60,  by  giving  us  his  90 
day  note. 

20.  Henry  Parker  paid  3  months'  ac- 
crued interest  on  his  note  of  $700  at  8  per 
cent,  by  handing  us  an  order  for  Mdse.  on 
C.  H.  Day  &  Sons. 


Drill  No.  4 


EXPENSE,  CHATTELS,  AND  REAL  ESTATE  ACCOUNTS 


The  Expense  Account  is  charged  for  all  current  costs  in  conducting  the  business,  as 
rents,  fuel,  salaries,  taxes,  insurance,  etc.  It  may  happen  that  materials  purchased  and 
charged  to  the  Expense  account,  may  be  again  sold,  in  which  case  this  account  must  be 
credited.  Unexpired  rents,  insurance,  etc.,  may  also  be  inventoried  as  a  part  of  the  re- 
sources, when  the  books  are  closed. 

The  Chattels  Account  includes  all  movable  property  acquired  in  conducting  the  busi- 
ness, as  office  furniture,  trucks,  teams,  tools,  etc.  In  many  business  houses  the  ledger  title 
"Furniture  and  Fixtures"  is  used  in  place  of  "Chattels."  As  the  property  included  under 
Chattels  deteriorates  in  value,  this  account  usually  shows  a  loss.  It  is  debited  for  all  property 
acquired  for  carrying  on  the  business  and  which  is  neither  regularly  consumed  nor  purchased 
to  be  sold  at  a  gain;  and  credited  when  any  of  the  property  for  which  it  was  originally 
charged,  is  disposed  of. 

Real  Estate  includes  land  and  the  fixtures  upon  it,  as  buildings,  timber,  fences,  fruit 
trees  etc.,  also  the  fixed  furnishings  of  buildings,  as  doors,  steam  and  gas  pipes,  furnaces,  etc. 
Separate  accounts  are  usually  kept  with  the  different  real  estate  properties,  as  "House  at  No. 
30  Pine  St.,"  or  "Cooper  Building,"  "Oakwood  Farm,"  etc.  When  this  is  done,  the  several 
real  estate  accounts  are  charged  respectively  with  all  items  of  their  cost,  as  insurance,  repairs, 
taxes,  etc. ;  and  credited  with  what  they  yield  in  rents.  In  the  Drills,  charge  or  credit  the  ac- 
counts as  indicated  by  the  property  described. 

Note. — In  a  manufacturing  business,  the  Real  Estate  and  Chattels  accounts  would  be  included  in 
accounts  with  Plant,  Machinery,  Tools,  etc. 


126 


NEW  INDUCTIVE  BOOKKEEPING 


TRANSACTIONS  FOR  JOURNALIZIING,  MARCH,  19- 


1.  Gave  A.  C.  Bates  our  check  for  rent 
of  store  for  January,  $75. 

2.  Bought  of  the  Darling  Vehicle  Co.. 
on  account  at  60  days,  a  wagon  for  deliver- 
ing goods,  $90. 

3.  Bought  of  Webster  Coal  Co.,  on  our 
note  at  90  days,,  for  store  use,  10  tons  Le- 
high Valley  Coal  at  $8.25. 

4.  Paid  with  our  check,  janitor's  salary 
at  Hope  St.  Building  for  January,  $65. 

5.  We  have  bought  for  $2500  a  resi- 
dence property  at  No.  165  Elm  St.,  giving 
our  check  for  the  same. 

6.  C.  H.  Hammond,  tenant  of  Flat  B, 
"Hope  St.  Bldg.,"  hands  us  his  check  for 
rent  to  Jan.  1,  $45. 

Note. — In  real  estate  business,  where  there  are 
dealings  with  a  number  of  tenants,  personal  ac- 
counts with  these  are  not,  as  a  rule,  kept  in  the 
general  ledger,  but  in  a  subsidiary  "Rent  Ledger," 
or  "Rent  Roll  Book."  A  special  cash  book  is  also 
used,  in  which  there  are  separate  columns  for  pay- 
ments on  account  of  the  several  buildings,  the 
totals  of  these  columns  being  posted  periodically 
to  the  credit  of  the  buildings  accounts.  The  trans- 
actions here  presented  are  not  for  the  purpose  of 
showing  the  actual  methods  employed  in  real 
estate  bookkeeping,  but  to  familiarize  the  student 
with  the  debits  and  credits  involved  in  them. 

7.  A.  P.  Moore,  traveling  salesman,  re- 
ports the  week's  expense  bill,  $61.20,  and  we 
remit  Chicago  draft  for  same. 

Note. — Money  is  usually  remitted  to  distant  lo- 
calities by  means  of  bank  drafts  drawn  on  the 
banks  of  the  larger  cities  and,  hence,  called  "N.  Y. 
drafts,"  "Chicago  drafts,"  etc. 

8.  Store  lighting  bill  to  Feb.  1,  $8.60, 
has  been  presented  and  paid  by  check. 

9.  A  neighboring  firm,  A.  W.  Randall 
&  Co.,  are  unable  to  purchase  coal  for  their 
store  on  account  of  team  drivers'  strike,  and 
we  have  sold  them,  on  account,  two  tons  of 
our  own  stock  at  $9.50  per  ton. 

10.  An  office  desk  which  we  do  not  need 
has  been  sold  for  $45  to  H.  Parker  on  his 
30  day  note. 


11.  Paid  cash  for  taxes  on  No.  165  Elm 
St.,  $41.20. 

12.  A.  C.  Tilton,  a  tenant  of  Flat  C. 
Hope  St.  Bldg.,  has  given  us  a  60  day  note 
for  $125  in-  adjustment  of  rent  to  Mar.  1, 
last. 

13.  T.  S.  Metcalf,  printer,  has  rendered 
us  a  bill  for  $19.40  for  printing  advertising 
matter.  We  have  passed  the  amount  to  his 
credit. 

14.  Thomas  Dixon  has  made  and  deliv- 
ered to  us  a  show  case  for  store  use,  price 
$23.50,  receiving  his  pay  in  groceries  per  bill 
rendered. 

15.  Gave  to  Chas.  Mason,  plumber,  our 
check  for  $4.25  for  repairing  water  pipes  in 
store. 

16.  Henry  Way,  traveling  salesman,  is 
credited  with  one  month's  salary,  $125. 

Note. — Salaries  are  usually  charged  periodically 
(once  a  month  or  once  a  year)"  to  the  Expense  ac- 
count, the  several  employees  being  credited.  Pay- 
ments on  account  of  salary  are  in  this  case 
charged  to  personal  accounts  of  the  employees,  at 
the  time  the  payments  are  made.  Sometimes  a 
salary  account  is  kept.  In  concerns  where  there 
are  many  employees,  salaries  are  usually  paid 
weekly,  and  the  Expense  or  Salary  account  is 
charged,  and  Cash  credited  at  the  time  the  weekly 
pay  rolls  are  made  out  and  paid. 

17.  We  have  purchased  on  account  from 
the  Lindell  Furniture  Co.,  a  roller  top  desk 
for  the  office,  $56.50. 

18.  The  Consumers  Oil  Co.  present  their 
bill  for  gasoline  supplied  for  engine  during 
February,  $7.25.  Gave  our  check  in  pay- 
ment. 

19.  We  have  passed  to  the  credit  of  the 
Eagle  Coal  Co.  their  bill  of  this  date  for  coal 
supplied  to  the  Hope  St.  Bldg.,  $148.60. 

20.  George  Denman  has  sold  to  us  1 
dozen  brooms  for  use  in  the  store,  receiving 
his  pay  in  Mdse.  as  per  bill  rendered,  $3.50. 


Drill  No.  5 


TRANSACTIONS  FOR  JOURNALIZING,  APRIL,  19— 


1.  Remitted  to  A.  B.  Johnson  &  Co.,  N. 
Y.  draft  for  $261.50  for  Mdse.  per  their  bill 
of  Nov.  1,  and  previously  credited  to  their 
account. 

2.  Bought  of  Dale  &  Co.  on  account,  a 
rug  for  the  office,  $45.75. 


3.  C.  E.  Snow  has  given  us  his  90  day 
note  for  $85.40  in  settlement  of  his  account 
to  date. 

4.  We  have  sold  to  Charles  Warren  to 
apply  as  a  payment  on  our  note  of  Jan.  12, 
Mdse.  per  bill  rendered,  $48.20. 


JOURNALIZING  DRILLS 


127 


5.  Samuel  Hart,  carpenter,  has  rendered 
a  bill  for  labor,  $28.50,  in  making  certain 
repairs  in  our  store  room,  and  the  amount 
has  been  placed  to  the  credit  of  his  rent  ac- 
count, for  occupying  our  tenement  at  No.  20 
Olive  St. 

6.  R.  Stevens  has  delivered  at  the  store 
115  lbs.  of  live  poultry  at  6c,  the  amount  to 
be  endorsed  as  a  payment  on  his  note  of 
Aug.  1. 

7.  We  have  handed  our  check  for  $150 
to  the  law  firm  of  Bryant  &  Wilson  for  their 
services  in  recent  litigation,  to  which  our 
firm  was  a  party. 

8.  S.  R.  McGuire  hands  us  his  check  for 
$41.20  to  pay  balance  on  his  account  to  date. 

9.  A  horse  used  in  our  delivery  service 
has  died,  value  $75. 

10.  We  have  received  a  Postoffice 
Money  Order  for  $58.70  from  Henry 
Snyder,  of  Winona,  in  payment  for  a  bill  of 
goods  sold  him  on  account. 

11.  A.  C.  Wells  has  presented  a  bill  for 
drayage,  amounting  to  $21.25,  and  received 
payment  in  Mdse.  from  our  store  per  bill 
rendered. 

12.  C.  R.  Dean  has  handed  us  a  cash 
order  on  Hamilton  &  Co.  for  $25,  to  be 
applied  in  paying  accrued  interest  on  his 
note  of  Aug.  5,  last, 

13.  By  mutual  agreement,  S.  R.  Peters 


assumes  a  balance  on  account  owed  by  D.  E. 
Warren,  amounting  to  $26.40,  and  the 
amount  has  been  transfered  to  Mr.  Peters' 
account. 

14.  N.  S.  Palmer  has  assigned  to  us  a 
note  for  $50  made  in  his  favor  by  A.  B. 
Manley,  the  same  to  be  applied  to  Mr.  Pal- 
mer's account  with  us. 

15.  The  thieves  who  recently  broke  into 
our  store  have  been  captured,  and  goods 
amounting  to  $150  recovered.  ( See  Drill  2, 
Trans.  19.) 

16.  We  have  given  our  check  for  $35.40 
in  payment  for  water  rent  at  "Hope  St. 
Bldg." 

17.  A.  W.  Watson,  traveling  salesman, 
reports  expense  bill  for  the  week,  $61.25, 
requesting  that  the  same  be  credited  to  his 
personal  account. 

18.  A  coal  stove  belonging  to  the  firm, 
and  hitherto  used  in  the  store,  has  been  sold 
on  personal  account  to  B.  F.  Nelson,  part- 
ner, for  $18.50. 

19.  Sold  to  A.  B.  French  a  bill  of  gro- 
ceries amounting  to  $65.  He  pays  for  same 
by  assigning  to  us  C.  H.  Smith's  note  of 
Mar.  2  in  his  favor. 

20.  The  Eureka  Electric  Light  Co.  pre- 
sents a  bill  for  $19.60  for  lighting  building 
at  165  Elm  St.,  requesting  that  the  same 
be  passed  to  the  credit  of  their  account. 


Drill  No.  7 


ORDERS,  DRAFTS  AND  ACCEPTANCES 


An  Order  is  a  written  request  to  pay  money  or  deliver  merchandise  or  other  property  to 
the  person  to  whom  the  order  is  issued. 

A  Check  is  an  order  addressed  to  a  bank  requesting  the  payment  of  money  on  deposit. 

A  Draft  is  an  order  drawn  by  one  bank  upon  another,  or  by  a  person  or  firm,  directing 
the  payment  of  money  through  a  bank. 

Note. — Orders  drawn  by  one  firm  upon  another  requesting  the  payment  of  money  to  a  third,  were 
formerly  used  to  a  considerable  extent,  and  were  called  drafts,  but  such  orders  are  now  but  little  used, 
and  when  they  are,  are  usually  spoken  of  as  orders. 

The  Original  Parties  to  an  order  or  draft  are  three,  viz! :  the  drawer  or  maker  who 
issues  the  order,  the  drawee  or  payer  upon  whom  it  is  drawn,  and  the  payee  to  whom  it  is  pay- 
able. Thus,  if  A  orders  B  to  pay  C,  A  is  the  drawer  or  maker,  B  is  the  drawee  or  payer,  and 
C  is  the  payee. 

The  Subsequent  Parties  to  an  order  or  draft,  are  those  into  whose  possession  it  may 
come  by  assignment.  They  are  variously  known  as  assignees,  assignors,  and  endorsers,  ac- 
cording to  their  relation  to  the  instrument  in  question. 

Orders  or  drafts  may  be  drawn  payable  "at  sight,"  that  is,  upon  presentation,  or  a  cer- 


128 


NEW  INDUCTIVE  BOOKKEEPING 


tain  time  "after  sight"  or  "after  date."  In  the  former  case  they  are  known  as  sight  orders 
or  sight  drafts,  and  in  the  latter  as  time  orders  or  time  drafts. 

A  time  order  or  draft  should  promptly  be  presented  to  the  drawee  for  his  verification, 
or  "acceptance,"  as  it  is  called  in  business.  The  drawee  accepts  a  draft  by  writing  or  stamp- 
ing the  word  "Accepted"  across  the  face  (usually  in  red  ink)  followed  by  his  signature  and 
the  date.  An  instrument  thus  accepted  is  known  in  business  as  an  acceptance.  It  is  treated 
as  a  bill  payable  by  the  acceptor  and  as  a  bill  receivable  by  others. 

Checks  are  customarily  sight  papers,  and  are  not  "accepted"  in  the  ordinary  way,  though 
as  a  means  of  enabling  the  drawer  to  use  them  as  commercial  paper,  banks  often  "certify" 
them  by  stamping  the  word  "Certified"  over  the  cashier's  signature. 

Drafts  for  Collection.  The  principal  use  of  drafts  in  modern  business  is  in  what  is 
known  as  drafts  for  collection.  These  are  used  as  a  means  of  collecting  debts  and  are  drawn 
by  the  creditor  through  his  local  bank  upon  debtors  in  other  cities.  The  bank,  though  named 
as  the  drawee,  acts  merely  as  a  collecting  agent,  and  is  not  debited  when  the  draft  is  issued, 
as  in  the  case  of  other  classes  of  drafts  and  orders.  Neither  is  the  drawee  credited  until  the 
bank  reports  payment  or  acceptance. 

DEBIT  AND  CREDIT  RULES  FOR  DRAFTS  AND  ORDERS 

(a)  Upon  issuing  a  sight  draft  or  order  (except  in  the  case  of  "drafts  for  collection" 
drawn  through  a  bank  or  other  collection  agency)  credit  the  drawee,  and  debit  the  property 
received,  or  if  given  on  account,  the  person  receiving  it. 

Note. — In  the  case  of  eight  orders,  etc.,  it  is  assumed  that  they  will  be  paid  on  presentation. 

(b)  When  you  are  advised  that  a  time  draft  has  been  accepted,  debit  Bills  Receivable, 
and  credit  the  drawee. 

(c)  When  the  bank  notifies  you  of  the  payment  of  a  sight  draft  drawn  through  them 
"for  collection,"  debit  Cash  (or  the  bank,  if  a  bank  account  is  kept,)  and  credit  the  drawee. 

(d)  When  you  pay  a  draft  or  order  drawn  on  you,  debit  the  drawer  and  credit  what- 
ever is  paid. 

(e)  When  you  accept  a  draft,  debit  the  drawer  and  credit  Bills  Payable. 

(f)  When  another's  acceptance  is  paid  to  you,  debit  whatever  is  received,  and  credit 
Bills  Receivable. 

(g)  When  your  own  acceptance  is  paid,  debit  Bills  Payable,  and  credit  whatever  is 
paid. 

(h)  The  drafts,  checks,  or  orders  of  others,  payable  in  cash  "at  sight,"  when  received 
or  transferred  by  you,  are  treated  as  cash. 

TRANSACTIONS  FOR  JOURNALIZING,  MAY,  19— 


1.  We  have  given  to  Thomas  Malloy  on 
account,  an  order  for  Mdse.,  to  the  amount 
of  $25  on  T.  C  Smith  &  Co.     (a). 

2.  We  have  accepted  at  60  days  the 
draft  of  A.  P.  Wallace  &  Co.,  Chicago,  for 
invoice  of  Mdse.  delivered  April  30,  $187.90. 
(e). 

3.  T.  S.  Miller  presents  A.  R.  Johnson's 
order  on  us  for  Mdse.  amounting  to  $20  and 
receives  the  goods  as  per  bill  rendered,     (d). 

4.  The  Merchants  Bank  notifies  us  that 
a  sight  draft  for  $75  for  collection,  drawn 
by  us  on  Harlan  &  Miner,  Evansville,  111., 
has  been  paid  and  the  amount  passed  to  our 
credit,     (c). 

5.  On  April  26,  we  drew  for  collection 


through  the  Drovers  Bank,  a  90  day  draft 
for  $175  on  N.  P.  Barnes  &  Co.,  St.  Louis. 
The  bank  has  delivered  to  us  their  accept- 
ance,    (b). 

6.  We  have  received  from  L.  W.  Baker 
&  Son  a  Chicago  draft  for  $126.15  in  pay- 
ment of  their  acceptance  of  April  5,  in  our 
favor,     (f). 

7.  We  have  adjusted  the  balance  of  our 
account  with  C.  B.  McLean  &  Co.,  Cincin- 
nati, by  giving  them  an  order  for  cash, 
$240.60,  payable  on  presentation  to  Randall 
&  Brown,  Covington,  Ky.     (a). 

Note. — Orders  of  this  kind  are  often  referred  to 
by  authors  as  "drafts,"  but  among  business  men 
they  are  usually  called  orders. 

8.  We  have  bought  a  Remington  type- 


JOURNALIZING  DRILLS 


129 


writer  for  office  use,  from  the  agent,  S.  W. 
Williams,  handing  him  in  payment  our 
order  on  W.H.Martin  &  Co.  for  cash,  $100. 

9.  Remitted  to  Hall  &  Swift,  Rock 
Island,  111.,  a  Chicago  draft  for  $265.90  in 
payment  of  our  acceptance  of  April  10,  in 
their  favor,     (g). 

10.  M.  F.  Munson  has  assigned  to  us, 
to  be  applied  on  his  account,  a  60  day  ac- 
ceptance in  his  favor  for  $75.20  issued  on 
May  2,  by  T.  B.  Arthur  &  Sons. 

11.  We  have  given  our  check  in  pay- 
ment of  a  cash  order  for  $25  drawn  on  us 
May  10,  by  Chas.  Benson  and  presented  by 
Geo.  P.  Cook. 

12.  The  Merchants  Bank  notifies  us  that 
a  demand  note  for  $150,  made  in  our  favor 
May  1,  by  B.  T.  Robinson  and  given  to  that 
bank  for  collection,  has  been  paid  on  pre- 
sentation and  the  amount  passed  to  the 
credit  of  our  bank  account. 

13.  We  have  received  from  T.  B.  Thurs- 
ton &  Co.,  Chicago,  an  invoice  of  Mdse. 
amounting  to  $142.60  and  have  sent  them  in 
payment  our  cash  order  on  the  Union  Com- 
mission Co.,  Chicago. 

14.  C.  H.  McGee  presents  our  accept- 
ance for  $125  in  favor  of  Hammond  &  Co., 
assigned  to  him  by  the  latter  firm,  and  re- 


quests the  same  to  be  credited  to  his  account. 
We  comply  with  the  request  and  take  up 
the  acceptance. 

15.  Chas.  Tomlinson  has  accepted  our 
30  day  draft  on  him  for  $75  for  overdue 
rent  of  Flat  C  in  Hope  St.  Bldg. 

16.  Arthur  Miller,  partner,  has  received 
on  account,  the  firm's  order  for  Mdse.  on 
Venable  &  Co.,  amounting  to  $50. 

17.  Our  60  day  draft  for  $150  on  Spen- 
cer &  Hill,  Kewanee,  111.,  drawn  for  collec- 
tion through  the  Merchants  Bank,  was  ac- 
cepted May  15,  and  the  acceptance  returned 
to  us. 

18.  We  have  remitted  the  Chicago  Gro- 
cery Co.,  on  account,  our  30  day  draft  for 
$217.59  on  A.  B.  Mason  &  Son. 

19.  S.  H.  Baker  has  remitted  us  on  ac- 
count his  60  day  draft  for  $73.25  on  Jones 
&  Middleton,  which  draft  has  been  pre- 
sented this  day  and  accepted. 

20.  George  Peterson,  of  Ames  &  Peter- 
son, coal  dealers,  and  a  tenant  of  Flat  D, 
Hope  St.  Bldg.,  has  handed  us,  on  account 
of  rent,  an  order  on  his  firm  for  $60,  payable 
in  coal.  We  have  presented  this  order  and 
the  coal  has  been  delivered  for  use  in  our 
store. 


Drill  No.  8 

COMPOUND  JOURNAL  ENTRIES  INVOLVING  PREVIOUS  ACCOUNTS 

Compound  Journal  Entries  are  those  that  exhibit  debits  and  credits  affecting  three  or 
more  accounts,  as  for  instance,  when  an  account  is  settled  with  note  and  cash,  or  cash  is  given 
in  payment  of  a  note  with  accrued  interest.  Although  in  practice,  such  transactions  are  not 
usually  journalized,  the  journal  entry  is  the  best  means  of  testing  the  student  as  to  his  correct 
perception  of  the  debits  and  credits  involved. 


TRANSACTIONS  FOR  JOURNALIZING,  JUNE,  19- 


1.  Sold  A.  W.  Long  Mdse.  per  bill  ren- 
dered, $65.20,  receiving  cash,  $50.  Balance 
on  account. 

Note. — In  practice  Mr.  Long  would  be  charged 
in  the  sales  book  for  the  whole  bill,  and  credited 
in  the  Cash  Book  for  the  payment. 

2.  Henry  Baxter  hands  us  his  check  in 
payment  of  his  note  for  $200  with  60  days' 
accrued  interest  at  6  per  cent. 

3.  Bought  an  invoice  of  Mdse.  of  Har- 
mon &  Scott  per  bill  rendered,  $2890.   Gave 


them  our  note  at  60  days  for  $2390  and  our 
check  for  balance. 

4.  Gave  our  check  to  the  Merchants 
Bank  for  our  note  in  their  favor  for  $500 
with  90  days'  accured  interest  at  6  per  cent. 

5.  Bought  of  Turner  &  Co.  an  invoice 
of  Mdse.  amounting  to  $742.75.  Remitted 
them  N.  Y.  draft  for  $400  to  apply ;  balance 
on  account  at  30  days. 

6.  George  Wells  has  renewed  his  note 
of  Jan.  1,  19 — ,  for  $175,  with  accrued  in- 


130 


NEW  INDUCTIVE  BOOKKEEPING 


terest,  $20.03,  giving  a  new  note  at  90  days 
for  the  whole  amount. 

Note. — In  this  transaction  our  B.  Rec.  account  is 
increased  by  $20.03 ;  but  in  order  that  the  items  of 
the  B.  Rec.  account  may  correspond  to  the  entries 
in  the  Bill  Book,  it  is  well  to  debit  the  B.  Rec.  ac- 
count for  the  note  received,  and  credit  it  for  the 
one  cancelled,  and  the  Interest  account  for  $20.03, 
instead  of  merely  as  a  simple  journal  entry  charg- 
ing B.  Rec.  and  crediting  Interest. 

7.  Sold  S.  Maynard  an  invoice  of  goods 
amounting  to  $476.90.  He  presents  in  pay- 
ment our  note  in  his  favor  for  $250  with  ac- 
crued interest,  $18.90,  and  his  check  for  bal- 
ance.     (Three  debits.) 

8.  Bought  of  Steel  Bros.,  an  invoice  of 
Mdse.  per  bill  of  June  5,  amounting  to 
$214.25.  Gave  them  as  part  payment  our 
check  for  $150,  balance  on  account  at  30 
days. 

9.  Sold  to  R.  S.  Parker  a  bill  of  grocer- 
ies amounting  to  $96.50.  He  hands  us  in 
payment  Hart  &  Jones'  60  day  acceptance  of 
June  5  for  $50,  and  his  check  for  balance. 

10.  We  have  purchased  of  H.  A.  Allen 
for  $75,  a  second-hand  typewriter  for  office 
use,  giving  him  in  payment  our  cash  order 
for  $60  on  his  brother,  T.  S.  Allen,  who 
owes  us  rent  on  cottage  at  No.  16  Clay  St., 
and  our  check  for  balance. 

11.  G.  S.  Martin  has  assigned  to  us  J. 
Webster's  note  in  his  favor  for  $125,  with 
accrued  interest  to  date,  $11.45,  the  same  to 
be  applied  to  Mr.  Martin's  account. 

12.  J.  S.  Cook,  Mendota,  111.,  has  re- 
mitted to  us  a  N.  Y.  draft  for  $75  as  part 
payment  of  his  acceptance  of  May  1,  for 
$127.10. 

13.  The  salary  for  May  of  the  janitor  of 
our  building  at  No.  20  Vine  St.,  amounting 


to  $60,  has  been  paid  with  an  order  for 
Mdse.  on  Kendall  &  Co.  for  $35  and  our 
check  for  balance. 

14.  We  have  paid  our  note  of  Jan.  1  for 
$75  in  favor  of  R.  S.  Carver,  with  accrued 
interest  to  date  $2.06,  with  our  cash  order 
on  C.  H.  Snow  &  Co. 

15.  We  have  assigned  to  B.  F.  Nelson, 
partner,  on  account,  L.  W.  Martin's  note 
for  $46.90  with  accrued  interest,  $3.41. 

16.  A.  K.  Medill,  an  insolvent,  is 
charged  on  our  books  with  a  balance  of 
$75.40.  The  receiver  has  made  an  adjust- 
ment of  his  affairs,  the  creditors  being  al- 
lowed 25  per  cent  of  their  claim.  We  have 
received  a  check  for  settlement  on  this  basis, 
and  closed  the  account. 

17.  Sold  to  A.  R.  Stillwell  a  bill  of  gro- 
ceries amounting  to  $92.50.  He  gives  us 
his  check  for  $50  and  his  note  at  30  days 
for  balance. 

18.  We  have  bought  of  Hamilton  &  Co. 
on  our  acceptance  at  30  days,  two  Smith 
Premier  Typewriters  at  $95  each,  and  3 
dozen  typewriter  ribbons  at  $5  per  dozen. 

Note. — The  ribbons  should  be  charged  to  Ex- 
pense. 


agreement 


19.  Pursuant  to  previous 
Arthur  Miller,  partner,  has  added  $1000  to 
his  investment  by  assigning  to  the  firm,  S. 
F.  Benson's  note  in  his  favor  for  $600,  with 
accrued  interest,  $21.70,  and  a  check  on 
Merchants  Bank  for  balance. 

20.  Sold  to  Amos  Cook  a  bill  of  Mdse. 
amounting  to  $146.20.  He  assigns  to  us 
George  Parker's  note  in  his  favor  for  $75, 
with  accrued  interest,  $14.20;  balance  on 
account. 


Drill  No.  10 


DISCOUNT,  COMMISSION,  AND  COLLECTION  ACCOUNT 

Discounts,  Commissions,  and  Collections  include  losses  and  gains  that  are  usually  kept 
as  separate  accounts,  instead  of  being  entered  directly  in  the  Loss  and  Gain  or  the  Expense 
account.  Entries  for  such  charges  are  usually  provided  for  in  special  columns,  but  for  rea- 
sons previously  stated  the  student  is  here  required  to  present  them  in  the  form  of  Journal 
entries. 

Discounts  include  allowances  or  rebates  from  the  regular  trade  prices  of  goods.  They 
are  usually  given  to  encourage  prompt  payments. 

The  Discount  account  is  debited  for  all  discounts  allowed,  and  credited  for  all  discounts 
received. 


JOURNALIZING  DRILLS 


131 


Note. — A  distinction  should  be  made  between  commercial  discounts,  as  here  defined,  and  bank  dis- 
counts, which  really  consist  of  interest  paid  or  charged  in  advance,  and  which  should  properly  be  entered 
in  the  Interest  account. 

Commission  Accounts  are  kept  when  goods  are  disposed  of  by  an  agent.  They  repre- 
sent a  gain  to  the  agent  and  a  loss  to  the  principal,  and  are  credited  or  debited  accordingly. 
In  most  cases,  separate  accounts  would  be  kept  with  "Commission  Paid"  and  "Commission 
Received." 

Collections  are  the  charges  allowed  to  individuals,  banks,  or  collection  agencies  for  the 
collection  of  debts.  They  are  usually  computed  as  a  percentage  on  the  amount  collected,  ex- 
cept in  the  case  of  banks,  which  usually  make  a  "lump  charge"  of  from  fifteen  cents  to  a  dollar 
or  more,  according  to  the  amount  of  the  draft,  note  or  other  paper  collected.  If  collection 
charges  of  this  nature  are  comparatively  infrequent,  they  would  probably  be  charged  to  the 
Expense  account,  but  if  they  are  of  sufficient  importance  to  constitute  a  material  increase  in 
the  cost  of  conducting  the  business,  a  Collection  account  should  be  kept. 

The  Collection  account  is  debited  for  all  collections  allowed  or  paid  by  us,  and  credited 
for  all  collections  allowed  or  paid  by  others  to  us. 


TRANSACTIONS  FOR  JOURNALIZING,  JULY,  19— 


1.  Barrow  Bros,  remit,  on  account,  their 
check  in  payment  of  our  bill  of  June  21, 
$175.60,  less  allowed  discount  of  5  per  cent. 

2.  We  remit  to  Hammond  &  Co.  on  ac- 
count, Chicago  draft  for  their  bill  of  June 
22,  $85.60,  less  6  per  cent. 

3.  The  Hayward  Collection  Agency,  of 
St.  Louis,  report  the  collection  of  our  ac- 
count against  S.  W.  Markham,  Richland, 
Mo.,  for  $56.20,  and  remit  check  for  the 
amount  less  collection  charges,  5  per  cent. 

4.  The  Merchants  Bank  has  collected 
C.  F.  Noble's  acceptance  in  our  favor  for 
$245.60,  and  has  placed  the  proceeds  to  our 
credit,  less  50c  collection  charges. 

5.  On  June  21,  we  sold  R.  M.  Fernald  a 
bill  of  goods  amounting  to  $138.40  at  30 
days,  less  5  per  cent.  Mr.  F.  has  remitted 
a  N.  Y.  draft  for  $50  to  apply  on  this  pur- 
chase. 

Note.— Divide  the  $50  by  95  per  cent  to  find  the 
amount  for  which  Mr.  Fernald  should  be  credited. 

6.  O.  P.  Harvey,  of  Beatrice,  Neb.,  has 
remitted  his  personal  check  for  the  balance 
of  his  account,  $22.60.  We  have  deposited 
the  check  with  the  Merchants  Bank  and  it 
has  been  passed  to  our  credit,  less  collection 
charges,  25  cents. 

7.  Our  agent  for  the  rental  of  apart- 
ments in  our  building,  No.  60  Walnut  Ave., 
has  remitted  rent  collections  for  June,  $175, 
less  his  commission  of  6  per  cent. 

Note. — If  a  firm  collects  many  rents  through  an 
agent,  an  account  with  "Rent  Commissions,"  or 
"Rent  Collections,"  would  probably  be  opened.  If 
the  charge  was  exceptional,  it  would  be  entered  on 
the  Expense  account.     In  these  Drills  the  student 


may  charge  all  agents'  commissions  to   "Commis- 
sions." 

8.  H.  S.  Randolf  buys  country  produce 
for  us  at  market  prices,  receiving  a  commis- 
sion of  5  per  cent  on  all  goods  bought.  He 
has  delivered  at  our  warehouse,  goods 
amounting  to  $162.50,  and  we  have  given 
him  our  check  for  the  amount  plus  his  com- 
mission. 

9.  The  Merchants  Bank  reports  the  col- 
lection of  C.  W.  Miller's  acceptance  of  May 
6,  in  our  favor,  for  $79.20,  collection 
charges  25  cents.     Proceeds  to  our  credit. 

10.  Albright  &  Clark  remit  their  check, 
in  payment  of  our  bill  of  May  20,  $246.15, 
less  8  per  cent  discount. 

11.  The  Commercial  Bank  reports  col- 
lection of  T.  B.  Spencer's  note  of  Jan.  1, 
19 — ,  in  our  favor,  $79.50,  with  accrued  in- 
terest to  date,  $7.30.  Collection  charges 
and  fees  $3.15.  They  remit  proceeds  in 
cash. 

12.  We  have  been  selling  on  commission 
a  line  of  goods  for  F.  W.  Baker  &  Co., 
Chicago,  keeping  an  account  with  these 
goods  under  the  title  of  "Baker's  Cereal 
Foods."  We  have  reported  sales  credited 
to  this  account  during  the  past  30  days, 
$214.75,  and  have  remitted  our  check  for 
this  amount  less  our  commission  of  20  per 
cent. 

Note. — Goods  handled  ^nder  these  conditions 
would  not  be  treated  as  ordinary  commission  con- 
signments. 

13.  We  have  made  a  proposition  to 
G.    P.    Moore  to  allow  him   a   special  dis- 


132 


NEW  INDUCTIVE  BOOKKEEPING 


count  of  5  per  cent  on  the  balance  of  his 
account  to  date,  $358.90,  for  immediate 
cash  payment.  He  accepts  the  proposition 
and  remits  his  check  for  settlement  on  these 
terms. 

14.  We  hold  R.  Smith's  note  for  $250, 
without  interest,  due  three  months  from  this 
date,  and  have  discounted  the  same  at  the 
Merchants  Bank,  at  8  per  cent  (bank  dis- 
count), the  proceeds  being  placed  to  our 
credit. 

15.  H.  S.  Randolf,  our  produce  buyer, 
has  rendered  a  bill  for  $175.90  for  goods 
purchased  and  delivered  as  per  our  contract 
(See  Transaction  8),  adding  commission, 
and  has  credited  on  this  bill,  $25  for  one 
month's  rent  of  Flat  A,  Hope  St.  building, 
which  he  occupies.  We  hand  him  our  check 
for  balance. 

16.  R.  S.  Walters  &  Co.  offer  us  a  spe- 
cial discount  of  6  per  cent  for  immediate 
payment  of  the  balance  we  owe  on  their 
account,  $348.60,  and  which  is  not  due  until 
Aug  1.  We  accept  their  proposition  and 
remit  check  for  the  sum  sufficient  to  adjust 
the  account. 

17.  We  remit  on  account  a  N.  Y.  draft 
to  A.  M.  Snyder  &  Co.,  Cincinnati,  Ohio, 
in  settlement  of  their  bill  of  June  1,  $213.50, 
less  5  per  cent  discount.     We  pay  cash  for 


the  draft  and  50  cents  for  exchange  on  the 
draft.      (Two  debits  and  two  credits.) 

Note. — Banks,  as  a  rule,  do  not  charge  their 
regular  customers  for  domestic  exchange  paper  for 
remittances.  When  such  charges  are  paid,  they 
are  usually  debited  to  Expense. 

18.  On  May  29,  we  purchased  of  Allen 
&  Sons  an  invoice  of  Mdse.  amounting  to 
$259.29,  on  account  at  60  days,  less  6  per 
cent  for  cash.  We  remit  our  check  for  a 
sum  sufficient  to  give  us  a  credit  of  $200  on 
the  bill. 

19.  Three  months  ago,  H.  Markham 
settled  his  account  amounting  to  $180,  with 
a  note  bearing  interest  at  8  per  cent.  As 
we  are  in  need  of  money,  we  offer  him  a 
rebate  of  10  per  cent  for  immediate  pay- 
ment of  the  obligation.  He  accepts  our 
proposition  and  hands  us  his  check  for  the 
amount. 

Note. — A  question  may  arise  here,  as  to  what  ac- 
count this  rebate  should  be  charged.  Clearly  it  is 
not  an  interest  item,  and  it  does  not  seem  to  come 
within  the  scope  of  a  discount  account,  which  is 
for  discounts  allowed  for  cash  payments  on  goods 
purchased  or  sold.  In  case  of  doubt  as  to  items  of 
this  kind,  it  is  quite  proper  to  enter  the  charge  to 
the  Loss  and  Gain  account. 

20.  We  have  deposited  for  discount  our 
90  day  note  for  $1000  (without  interest) 
with  the  Merchants  Bank,  and  they  have 
credited  us  for  the  amount  less  their  dis- 
count at  8  per  cent  per  annum  to  maturity. 


Drill  No.  11 


CLASSIFIED  MERCHANDISE,  FREIGHT  AND  SPECIAL  EXPENSE  ACCOUNTS 


It  is  often  desirable  to  keep  accounts  with  special  departments  of  Merchandise,  as  "Boots 
and  Shoes,"  "Provisions,"  "Crockery,"  etc.  Special  items  of  expense,  as  freight,  drayage, 
packing,  etc.,  being  charged  to  these,  instead  of  to  the  General  Expense  account.  It  is  quite 
often  desirable,  also,  to  subdivide  the  Expense  account  into  several  accounts,  as  "Insurance," 
"Taxes,"  "Rents,"  "Salaries,"  and  the  like. 

In  the  following  Drill,  special  accounts  will  be  kept  with  "Produce"  (including  butter, 
eggs,  poultry,  etc.),  "Flour  and  Feed,"  "Crockery,"  and  with  "General  Mdse.,"  for  all  other 
goods. 

The  expenses  of  the  business  will  be  kept  under  "Rents,"  "Salaries,"  "Office  Expense," 
"Insurance,"  and  "General  Expense"  for  other  charges.  Freight,  drayage,  expressage,  etc., 
when  incurred  in  connection  with  the  several  merchandising  or  "trading"  accounts,  will  be 
charged  to  the  account  affected,  in  other  cases  to  "General  Expense." 

It  is  expected  that  the  student  will  use  his  best  judgment  as  to  the  entries  required. 
Special  instructions  will  be  given  when  necessary. 


JOURNALIZING  DRILLS 


133 


TRANSACTIONS  FOR  JOURNALIZING,  AUGUST,  19— 


1.  A  shipment  of  flour  has  been  received 
from  the  Acme  Milling  Co.,  St.  Paul,  Minn., 
per  their  bill  of  Jan.  20,  $425.40,  terms 
60  days  net.     Paid  freight  charges,  $61.45. 

2.  Paid  weekly  salaries  of  clerks  per 
pay  roll,  in  cash,  $95. 

3.  J.  A.  Martin  has  delivered  butter  and 
eggs  as  per  bill  $23.50,  the  same  to  be 
credited  on  his  account. 

4.  Bell  &  Davis,  Cleveland,  Ohio,  send 
us  v  Memorandum  of  Credit  for  $38.50,  for 
breakage  in  an  invoice  of  Crockery  recently 
purchased  of  them  as  per  our  bill  rendered 
July  21. 

Note. — It  Is  assumed  that  the  Crockery  account 
has  been  charged  for  the  invoice  when  received. 

5.  Sold  to  A.  W.  Mason  on  account  a 
bill  of  goods  amounting  to  $147.20,  of 
which  $45.50  is  Flour  and  Feed,  $62.90 
Crockery,  and  the  remainder  fancy  gro- 
ceries. 

6.  Gave  to  R.  Miller,  a  check  for  $250 
for  rent  of  store  building  for  July. 

7.  Paid  cash  for  additional  insurance  on 
our  stock  of  goods,  $21.40. 

8.  The  bookkeeper's  salary  is  paid  to 
date,  $150.     (Office  Expense.) 

9.  Bought  of  T.  D.  Macomb  &  Co.,  St. 
Louis,  on  account,  an  invoice  of  goods 
amounting  to  $165.20.  consisting  of  75 
sacks  of  buckwheat  flour  at  40c,  and  the 
remainder,  canned  goods.  Paid  freight 
charges  $23.40,  $7.25  of  which  is  for  the 
flour. 

10.  Bought  of  the  Adams  Supply  Co., 
Chicago,  on  account,  a  refrigerator  for  use 
in  the  Produce  Department,  $125.  Paid 
cash  for  freight  on  same,  $6.25. 


11.  C.  E.  Pomeroy  has  delivered  at  our 
warehouse  butter,  eggs  and  poultry  amount- 
ing to  $178.20,  as  per  bill,  the  amount  plus 
his  commission,  6  per  cent,  and  freight 
charges,  $11.40,  is  paid  with  check  on  Mer- 
chants Bank. 

12.  Paid  the  Hawkins  Transportation 
Co.  for  drayage  to  date,  $34.90. 

13.  Sold  to  C.  A.  Wise  on  his  30  day 
note,  500  lb.  butter  at  20c  and  15  brl.  flour 
at  $4.50. 

14.  A.  W.  Seymour  has  delivered  to  us 
on  account,  40  bu.  oats  at  30c,  for  our  de- 
livery stables. 

15.  Gave  to  H.  Watson,  agent  of  ware- 
house rented  by  us,  a  cash  order  on  Hamlin 
&  Allen  for  $45  rent  for  February. 

16.  M.  O'Hara  presents  drayage  bill  to 
date,  $21.15,  receiving  his  pay  in  canned 
goods  $6.90,  dishes  $4.50,  and  cash  for  bal- 
ance. 

17.  Bought  of  Carter  &  Co.,  Chicago, 
on  our  acceptance  at  60  days,  a  bill  of  Mdse. 
amounting  to  $269.20,  of  which  $90.15  is 
for  glassware,  dishes,  etc.,  and  the  remain- 
der general  merchandise — Freight  charges. 
Crockery,  $9.40,  and  other  Mdse.  $11.50, 
paid  with  check. 

18.  C.  D.  Moore  presents  bill  for  office 
stationery,  $21.50,  which  is  passed  to  his 
credit. 

19.  We  have  sold  to  Hammond  &  Co. 
on  their  30  day  acceptance,  a  bill  of  goods 
consisting  of  chopped  feed  $75,  and  pro- 
duce $84.20. 

20.  S.  W.  Callahan,  our  porter,  is  dis- 
charged, receiving  cash  for  salary  to  date, 
$14.20. 


Drill  No.  12 

SPECIAL  MERCHANDISE  AND  EXPENSE  ACCOUNTS,  ETC.— (Continued) 
TRANSACTIONS  FOR  JOURNALIZING,  SEPTEMBER,  19— 


1.  P.  C.  Watson  presents  bill  for  $3.50 
for  printing  posters  to  advertise  our  Pro- 
duce Department,  which  is  paid  in  cash. 

2.  Twenty-five  dollars  has  been  turned 
over  to  the  head  bookkeeper,  to  be  used  for 
current  office  expenses. 

Note. — The  small  daily  expense  of  an  office  are 


often  kept  in  a  "Petty  Expense  Book,"  the  total  of 
which  is  posted  periodically.  A  fund  for  this  pur- 
pose is  given  to  the  Bookkeeper  or  Secretary.  This 
saves  the  trouble  of  entering  trifling  expense  items 
on  the  general  books. 

3.  The  agent  of  the  Western  Fire  In- 
surance Co.  has  handed  us  a  check  for  $50 
for  adjustment  of  loss  occasioned  by  a  small 


134 


NEW  INDUCTIVE  BOOKKEEPING 


fire  in  our  store.  This  damage  is  appor- 
tioned as  follows :  Flour  $15,  produce  $25, 
general  merchandise  $10. 

4.  We  have  remitted  to  A.  B.  Thomas 
&  Co.  a  check  on  First  National  Bank,  Chi- 
cago, in  payment  of  their  bill  of  Feb.  21, 
which  we  assume  has  been  entered  on  our 
books  to  their  credit.  Amount  of  bill 
$164.20,  terms  6—30. 

Note. — The  student  will  remember  that  a  special 
account  is  kept  with  this  bank. 

5.  T.  M.  Spencer  has  been  employed  on 
salary  to  canvass  the  country  for  the  pur- 
chace  of  produce.  He  presents  bill  for  one 
week's  salary  and  expenses,  $42.35,  which 
is  paid  with  our  check. 

6.  Paid  cash  to  S.  N.  Walker,  window 
dresser,  for  arranging  displays  of  goods  in 
store  window,  $7.50. 

7.  Bought  on  account,  a  bill  of  flower 
pots,  stone  jars,  etc.,  from  the  LaGrange 
Pottery  Co.,  $82.90.  Paid  freight  on  the 
same,  $11.50. 

8.  We  have  employed  R.  Jones,  a  but- 
ter packer,  to  work  in  our  Produce  Depart- 
ment, and  have  handed  him  $10  on  account 
of  salary. 

9.  By  the  overturning  of  a  pile  of  empty 
crates  in  our  store,  a  quantity  of  crockery 
was  destroyed,  the  invoice  cost  of  which  is 

$42.25. 

10.  The  weekly  salaries  of  store  em- 
ployees has  been  paid  in  cash,  $90. 

11.  Received  of  Eugene  Blair  &  Co. 
their  check  for  bill  of  crockery  sold  them  on 
account  Aug.  23,  amounting  to  $78.40, 
terms  5 — 30. 

12.  We  have  received  from  the  Grocers' 
Supply  Co.,  of  Milwaukee,  Wis.,  a  "Walker 
Butter  Worker"  for  use  in  our  Produce  De- 
partment. The  machine  is  billed  to  us  at 
$53.90,  which  with  the  freight  charges, 
$6.20,  we  have  paid  in  cash. 

Note. — Chattels  of  this  kind  are  charged. to  the 
special  department  in  which  they  are  required. 

13.  Some  months  since  we  endorsed  for 


security,  a  note  for  $50,  given  by  L.  David- 
son, to  the  Merchants  Bank.  It  now  ap- 
pears that  the  maker  has  absconded  and  the 
Bank  presents  the  note  to  us  for  payment, 
with  accrued  interest  $2.75,  and  protest  fees 
$1.50.  We  give  our  check  for  the  amount, 
and  take  up  the  note. 

Note. — An  endorsement  for  "accommodation"  or 
security  is  not  considered  a  bill  payable  by  the  en- 
dorser. 

14.  We  have  received  from  the  Western 
Straw  Board  Co.,  Iowa  Falls,  an  invoice  of 
egg  crates,  amounting  to  $27.12,  for  which 
we  give  our  check  on  the  Merchants  Bank. 

Note. — A  drayage  charge  directly  chargeable  to 
a  department  should  not  go  to  the  General  Ex- 
pense account. 

15.  We  have  sold  a  bill  of  flour  and 
feed,  amounting  to  $35.60,  to  N.  P.  Hanley, 
coal  dealer,  receiving  our  pay  in  coal  for 
store  use. 

16.  Oliver  Gray  presents  his  bill  for 
poultry  crates  for  our  produce  department, 
$62.25.  The  bill  is  paid  by  a  credit  to  his 
personal  account  for  balance  to  date, 
$27.50,  and  our  check  for  balance. 

17.  Twenty  brl.  of  salt  from  our  stock, 
invoiced  at  $1.30  per  brl.,  have  been  reserved 
for  use    in  the  Produce  Department. 

18.  We  have  sold  to  A.  P.  Monroe  & 
Co.,  on  account,  goods  as  follows  :■  Crock- 
ery $62.50,  canned  goods  $54.90,  flour  $65, 
packed  butter  $41.20,  terms  6—30. 

19.  Chas.  H.  Day  presents  bill  as  per 
contract,  for  filling  our  ice  house  at  Little 
Lake,  $175,  which  we  pay  in  cash,  after  de- 
ducting balance  of  his  store  account  to  date. 
$42.90. 

Note. — This  ice  is  for  our  refrigerators  in  the 
Produce  Department. 

20.  T.  M.  Jones,  by  mutual  agreement, 
has  become  a  partner  in  our  business,  and 
contributes  as  his  investment  a  certified 
check  for  $5000,  and  S.  B.  Balcom's  note 
secured  by  mortgage,  for  $1250,  with  ac- 
crued interest,  $75.50. 


Index— Part  One 


Page 

Acceptances    128 

Account  Pads    110,  112 

Accounts     5 

Accounts,    Classes   of 15 

Accounts  Payable    23 

Accounts,    Purpose   of 6 

Accounts   Receivable    23 

Actual    Business    Practice 47,  103 

Arrangement  of  Ledger  Accounts 41 

Balance   Sheet    (or   Statement) 40 

Balance  Sheet  Proof 41 

Balancing  the  Cash  Book 57 

Balancing  the  Pass  Book 75 

Bank  Account  on  Check  Stub 62 

Bank   Balance    60 

Bank   Checks    62 

Bank  Deposits   60 

Bank  Pass  Book   61 

Bank    Statement   to   Depositors 75 

Bills  Receivable  and  Payable 22 

Bookkeeping    5 

Business    5 

Business   Practice    47,  103 

Business   Records    5 

Capital     19 

Carbon  Duplicating 53,  105,  110 

Cash   Account    10 

Cash  Book    31,  104 

Cash  Proof    55 

Cash  Reigster  Accounting 106 

Cash   Sale  Pad 105 

Changing  from  Single  to  Double  Entry 115 

Charge   Sale  Ticket 110 

Chattels  Accounts    20,  125 

Check  Book    62 

Checking  Ledger   Entries 70 

Checking  the  Ledger 34,  59 

Check  Stub   62 

Classified    Accounts    132 

Classes  of  Accounts   15 

Closing  the  Books 35 

Closing  the  Cash  Book 31 

Closing  the  Ledger 42 

Closing  the  Ledger  from  Journal  Entries 46 

Collection   Account    130 

Commercial  Accounts    15 

Commission   Account    130 

Commercial    Paper    22 

Compound  Journal  Entry    97 

Correcting  Errors    t 59 

Counting   Money    48 

Credit  Entry  on  Charge  Sale  Ticket 112 

Day   Book 26,  103 

Daily  Cash  Proof  55 

Debits  and  Credits  7 

Deposits    60 

Depositor's    Signature    60 

Depositor's  Statement    75 


Page 

Deposit  Tickets 60 

Detection  of  Errors  in  Trial  Balances 80 

Discount  Account    130 

Drafts  for  Collection   127 

Duplicate  Order  Book   53 

Duplicate  Sale  Pad  105-110 

Equality  of  Debits  and  Credits 7 

Errors  in  Trial  Balances 80 

Expense  Account   17,  125 

Financial  Accounts    15 

Financial    Statement    40 

Flour  and  Feed  Business 85 

Forwarding  Sales  Book  Footings 68 

Furniture  and   Fixtures 20,    55 

Gains    7 

General  Rule  for  Debits  and  Credits 7 

Grouping  Ledger  Accounts   41 

Headings    13 

How   to  Indorse 67 

Indexing  the  Ledger    50 

Indorsing  Checks 67 

Interest  Account   23 

Inventories 40 

Invoices  and  Bills   51 

Jobbing  Grocery  Business    47 

Journal-Day  Book    27 

Journal   Forms    28 

Journalizing    , 27 

Journalizing   Drills    122 

Keeping  a  Set  of  Books 8 

Ledger     34 

Lodger  Accounts  Closed   t43,     44 

Ledger  Balances   in    Pencil 72 

Ledger  Explanation  Column    34 

Liabilities    6 

Loss  and  Gain  Account   , ,42,  123 

Losses v, 7 

Making  a  Deposit 60 

Merchandise  Account    , 10 

Merchandise  Credits    118 

Model  Cash  Book 34,  35,  50,     57 

Model  Cash  Proof  56 

Model  Day  Book   26,  las 

Model   Check    62,     67 

Model  Deposit  Ticket   60 

Model  Depositor's  Statement   76 

Model  Financial  Statement   39 

Model  Journal    27,  30,  32,  33,     46 

Model  Ledger   36,  37,  38,  43,     44 

Model  Loss  and  Gain  Closing 44 

Model    Opening   Entries 85,     96 

Model   Order   Ticket 53 

Model  Proof  Sheet 10 

Model  Profit  and  Loss  Statement 41 

Model   Receipt    69 

Model  Sales  Book  64 

Model  Signature  Card  60 

Model  Statement  39,  41,  115 


Page 

Model  Trial  Balance 39,  45,  61 

Net  Capital    19 

Net  Gain 42 

Numbering  Invoices   51 

Opening  a  Set  of  Books 19,     48 

Opening  Entries   21 

Orders  for  Merchandise  and  Cash 127 

Original   Entries    25 

Original  Parties    77,  127 

Parties  to  a  Check 62 

Partner's  Accounts    95 

Partnership  Business    95 

Partnership  Entries   96 

Pass  Book   61 

Pencil  Footings    11 

Personal   Accounts    15 

Posting  to  the  Ledger 31 

Posting  from  Sales  Book 63 

Postmarking    31,     87 

Preparing  Books  for  Inspection 74 

Produce  and  Provision  Business 95 

Present  Worth   40 

Promissory  Notes  77 

Proof  Sheet   10 

Proprietor's  Account    123 

Queries 6,  12,  16,  17,  18,  22,  73,  84,  89,  121 

Real  Etate  Account  20,  125 

Receipts    69 

Records  in  Business   5 


Page 

Red  Ink  Entries 42 

Reopening  Ledger  Accounts  45 

Resources    6 

Results  Shown  by  Accounts 6 

Retail  Grocery  Business  103 

Review  Quiz — Same  as  Queries. 

Rule  for  Debit  and  Credit 7 

Ruling 13 

Safe  Guard  Accounting  92 

Sales  Book    62 

Side  Posting   87 

Signature   Card    60 

Single  Entry  Bookkeeping 103 

Single  Entry  Cash  Book 104,  105 

Single  Entry  Day  Book 103 

Single  to  Double  Entry 115 

Single  and  Double  Entry  Compared 116 

Single  Entry   Statement   .' 115 

Special  Rulings    13 

Statements  of  Profits  and  Losses 40 

Statements    40,  115 

Subsequent  Parties    127 

Summaries  from  Cash  Register 107 

Taking   Stock    73 

Trial  Balance  after  Closing 45 

Terms  of  Sale  in  Ledger  Entries 80 

Trial   Balances 34,  59 

Wood  and  Coal  Business 90 


GOODYEAR'S 

Advanced  Accounting 


WITH 


BUSINESS  PRACTICE 

BY 

OFFICE  AND  TABLET  METHODS 


-by- 


SAMUEL  HORATIO  GOODYEAR,  A.  M. 

Author  of  the  Goodyear  Commercial  Series 


Cedar  Rapids,  Iowa 

Goodyear-Marshall  Publishing  Company 

1911 


CONTENTS 

PAGE 

Statements  and  Balance  Sheets 3 

Set  Five — Lumber  Accounting 9 

Business  Forms 33 

Set  Six — Business  Practice  in  Jobbing  and  Commission.—  73 

Set  Seven — Special  Column  Books 93 

Journalizing  Drills... 107 


Copyright  1909 
GOODYEAR-MARSHALL  PUBLISHING  CO. 


Statements  and  Balance  Sheets. 


Any  document  summarizing  in  tabulated  form  a  series  of  transactions  or  facts  bearing 
on  business  affairs  is  called  a  Statement. 

Statement  of  Account.  This  is  a  statement  exhibiting  the  condition  of  a  debtor's 
account,  as  shown  by  a  creditor's  books.  For  a  full  discussion  and  illustration  of  this  form 
of  statement,  see  pages  51  and  52. 

Depositor's  Statement.  This  is  a  statement  of  account  rendered  by  a  bank  to  a  de- 
positor. It  consists  of  a  list  of  deposits  received  and  checks  paid  for  the  depositor  for  a 
given  period,  usually  a  month. 

Financial  Statement.  This  is  a  detailed  statement  setting  forth  the  condition  of  a 
business  as  to  resources  and  liabilities,  volume  of  business,  etc.  It  is  often  required  by 
banks  or  wholesalers,  from  firms  seeking  credit,  or  it  may  be  made  out  in  any  other  case 
where  the  solvency  of  a  business  concern  is  under  consideration. 

Bank  Statement.  This  is  a  financial  statement  made  under  oath  by  the  officers  of 
a  bank,  setting  forth  the  resources  and  liabilities  of  the  bank.  The  law  requires  bank  state- 
ments to  be  rendered  periodically  to  the  proper  state  or  government  officer,  for  public  of- 
ficial record. 

Other  Classes  of  Statements.  The  various  kinds  of  "Financial  Reports,"  "Treas- 
urer's Reports,"  "Agent's  Balance  Sheets,"  etc.,  that  are  rendered  periodically  by  corpora- 
tions or  public  officials  having  various  kinds  of  financial  affairs  in  charge,  are  all  in  the 
nature  of  statements,  and  are  properly  so  called.  In  fact,  the  term  "statement"  has  a  very 
wide  application  in  business  affairs. 

Balance  Sheet.  This  term  is  properly  applied  to  any  complete  statement  of  the  con- 
dition and  result  of  a  business  as  shown  by  the  books.  The  Balance  Sheet  shows  an 
equilibrium  of  the  accounts  as  to  debit  and  credit,  and  takes  its  name  from  this  "balanced" 
condition  of  the  accounts  from  which  the  results  are  derived.  Various  forms  of  balance 
sheets  are  used  by  accountants,  but  with  respect  to  the  proper  application  of  the  term  "bal- 
ance sheet,"  the  form  is  immaterial.  Balance  sheets  are  commonly  spoken  of  as  "state- 
ments," but  strictly  speaking,  the  latter  term  is  much  more  general  in  its  application. 

We  illustrate  on  succeeding  pages  three  forms  of  balance  sheets  that  are  used  by  ac- 
countants. The  student  should  study  these  forms  carefully  before  attempting  the  practice 
work  in  balance  sheets  on  page  8. 


-3  — 


ADVANCED  ACCOUNTING 


TWO-COLUMN  BALANCE  SHEET— INDIVIDUAL 


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THE  TWO-COLUMN  BALANCE  SHEET 

Two-column  journal  ruling  can  be  used  for  this  style  of  balance  sheet. 

The  Double  Entry  Principle  in  accounting  is  apparent  in  the  two  methods  of  obtaining 
the  esent  Worth.  The  difference  between  resources  and  liabilities  is  the  same  as  the  sum 
of  t'J     net  gain  and  the  net  investment. 

k  balance  sheet  in  a  partnership  business  differs  from  the  individual  balance  sheet, 
mei  jiy  in  the  distribution  of  the  gains  or  losses  showing  the  interest  of  each  partner  at  the 
date  of  the  balance  sheet. 

In  the  individual  balance  sheet  given  above  only  two  inventories  are  used:  Merchan- 
dise unsold  $1196.55,  and  furniture  and  fixtures  estimated  worth  $205.20. 

In  the  partnership  balance  sheet  given  on  page  5,  the  following  inventories  are  used: 
Merchandise  unsold  $6029.31,  rent  of  store  room  prepaid  $42,  value  of  chattels  on  hand 
$480.    Each  partner  receives  one-half  of  the  net  gain. 


BALANCE  SHEETS 


TWO-COLUMN  BALANCE  SHEET— PARTNERSHIP 


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ADVANCED  ACCOUNTING 


LEFT  FOLIO   OF  TWO-PAGE  BALANCE  SHEET 


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THE  TWO-PAGE  BALANCE  SHEET 

The  two-page  balance  sheet,  shown  on  the  upper  parts  of  this  page  and  the  next,  pre- 
sents all  debits  on  one  page  and  all  credits  on  the  other.  The  loss  and  gain  summaries  are 
presented  first,  then  the  summaries  of  resources  and  liabilities. 

The  fact  that  both  parts  of  the  sheet  "balance"  when  net  gains  are  transferred  from 
the  first  part  to  the  second,  constitutes  the  "proof"  of  the  balance  sheet. 

The  two-page  balance  sheet  is  preferred  by  many  accountants,  but  it  is  not  so  easily 
understood  by  the  beginner,  as  is  the  single-page  balance  sheet  that  the  student  has  used  in 
the  foregoing  sets. 

THE  SIX-COLUMN  BALANCE  SHEET 


The  "six-column"  balance  sheet  shown  on  the  lower  half  of  page  7  has  the  advantage 
of  compactness,  also  showing  all  data  relating  to  any  account,  on  the  same  line  on  which  the 
account  title  is  written.  It  has  the  further  advantage  of  showing  in  the  first  two  columns 
the  state  of  the  ledger  accounts  before  closing,  and  in  the  last  two,  the  state  of  the  ledger 
after  closing.  In  the  columns  "after  closing,"  the  left  represents  resources  and  the  right 
represents  liabilities. 

As  in  the  two-page  balance  sheet,  the  proof  of  the  six-column  balance  is  shown  in  the 
fact  that  the  same  entries  (the  partner's  credits  for  net  gain)  balance  the  loss  and  gain  col- 
umns and  the  resource  and  liability  columns. 

Other  forms  of  balance  sheets  may  occasionally  be  met  with,  but  all  are  based  on  the 
same  principles,  and  should  present  no  difficulty  to  the  student  who  is  familiar  with  the 
standard  forms  here  illustrated. 


BALANCE  SHEETS 


RIGHT  FOLIO   OF  TWO-PAGE  BALANCE  SHEET 


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SIX-COLUMN  BALANCE  SHEET 


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8 


ADVANCED  ACCOUNTING 


PRACTICE  IN  BALANCE  SHEETS 

1.     Rule  a  page  of  writing  paper  in  the  form  for  six-column  balance  sheet  and  prepare 
a  balance  sheet  from  the  following  trial  balance  and  inventories: 

TRIAL  BALANCE— NO.  1 


Cash  Balance 

C.  F.  Roberts,  Investment 

Geo.  H.  Adams,  Investment 

Chattels 

Expense 

Interest 

Merchandise 

Bills  Rec. 

Bills  Pay. 

A.  N.  Davis 

Charles  Daniels 

Randall  &  Sons 

Western  Milling  Co. 

T.  W.  McLean  , 

S.  B.  Potter 

Central  Produce  Co. 

L.  Matthews 

INVENTORIES 

Chattels 

Expense 

Interest  Receivable 

Interest   Payable 

Merchandise 


f  900.00 

120.00 

7.50 

6.25 

2225.37 


2479 


928 
368 


1144 

362 
131 

89 

83 
202 
153 

11 


5956 


45 


12 


1950 
1831 


7 
1146 

875 


145 


5956 


20 


12 


2.     Prepare  a  two-column  balance  sheet  from  the   following  trial  balance  and   inven- 
tories, using  a  sheet  of  journal  paper : 

TRIAL  BALANCE— NO.  2 


Cash  Balance 

J.  L.  Hammond,  Investment 

Chattels 

Expense 

Interest 

Merchandise 

Bills  Rec. 

Bills  Pay. 

H.  S.  Chase 

Western  Coal  Co. 

L.  M.  Farnsworth 

Thomas  Lynch 

C.  B.  Daniels 

A.  Burnett  &  Sons 

Eagle  Mining  Co. 

. 

INVENTORIES 

Chattels 

$230.00 

Expense 

102.50 

Merchandise 

250.25 

1454 

592 
253 

521 
570 

83 

7 
108 
101 


3693 


80 


2823 

9 

453 
270 


3693 


80 


3.     Prepare  balance  sheets  in  three  forms  from  the  following  trial  balance  and  inven- 
tories— form  A  "two-column,"  form  B  "two-page,"  form  C  "six-column" : 

TRIAL  BALANCE— NO.  3 


Cash  Balance 

J.  Q.  Adams,  Investment 

Merchandise 

Expense 

Chattels 

Interest 

Bills  Rec. 

Bills  Pay. 

Accounts  Rec.                    ' 

Accounts  Pay. 

INVENTORIES 

Merchandise 

$25621.35 

Chattels 

575.00 

Expense 

59.70 

1258 

60 

iW» 

24189 

19 

10663 

78 

7175 

60 

589 

19 

21 

937 

*5 

565 

20 

5889 

10 

1778 

75 

26533 

14 

26533 

14 

SET  FIVE. 

Lumber  Accounting. 


The  following  set  illustrates  a  standard  system  of  keeping  books  that  will  apply  equally 
well  to  any  ordinary  mercantile  business. 

In  this  set  the  student  will  use  four  books  for  original  entries — Journal,  Cash  Book, 
Purchase  Book,  and  Sales  Book — and  the  Bill  Book  for  memoranda  of  Bills  Receivable  and 
Bills  Payable.  The  student  has  had  practice  in  the  use  of  the  first  two  books  named  above, 
and  further  explanation  of  these  books  will  not  be  required. 

In  a  business  having  frequent  purchases  and  sales,  it  will  save  many  ledger  entries  if 
these  transactions  are  recorded  in  separate  books,  the  book  for  purchases  being  called  a 
Purchase  Book  or  Invoice  Book,  and  the  book  for  sales  being  called  a  Sales  Book. 

Each  entry  in  these  books  consists  of  three  parts,  (1)  the  name  and  address  of  the  per- 
son from  whom  we  make  the  purchase  or  to  whom  we  make  the  sale,  (2)  the  items  and 
amount  of  the  purchase  or  sale,  (3)  the  terms  of  the  purchase  or  sale. 

THE  PURCHASE  BOOK 

If  an  invoice  accompanies  the  merchandise,  the  purchase  will  not  require  itemizing  in 
the  purchase  book,  reference  being  made  in  the  entry  to  the  number  or  date  of  the  invoice 
which  will  give  the  items. 

The  account  or  accounts  to  which  the  items  are  to  be  posted  are  shown  by  the  terms  of 
purchase.  If  a  purchase  is  on  account,  the  firm  from  whom  we  purchase  will  be  credited;  if 
cash  is  paid  for  the  purchase,  Cash  will  have  credit  in  the  cash  book ;  if  a  note  is  given  by  the 
firm  in  payment  for  the  purchase,  Bills  Payable  will  have  credit  in  the  ledger. 

Cash  purchases  should  be  checked  in  the  purchase  book  as  soon  as  the  payments  are  en- 
tered in  the  cash  book,  to  indicate  that  they  are  to  be  passed  over  when  the  purchase  book  is 
posted. 

The  total  of  the  purchases  is  forwarded  from  page  to  page  until  the  date  of  posting,  at 
which  time  the  total  is  ruled  up,  as  illustrated  on  page  10 — second  page  of  purchase  book. 
The  total  of  the  purchases  will  be  posted  to  the  debit  of  Merchandise,  and  this  total  will 
equal  all  of  the  ledger  and  cash  book  credits  from  the  purchase  book  for  the  given  period. 

THE  SALES  BOOK 

Each  sale,  except  small  cash  sales,  should  be  itemized  in  the  sales  book,  unless  carbon 
copies  are  kept  of  the  invoices  delivered  with  the  sales.  In  the  latter  case  a  single  line  de- 
scribing the  invoice  by  date  or  number  will  take  the  place  of  the  items. 

If  a  sale  is  made  on  account,  the  firm  to  whom  we  sell  will  be  debited;  if  cash  is  re- 
ceived for  the  sale,  Cash  will  be  debited  in  the  cash  book ;  if  a  note  is  received  for  the  sale, 
Bills  Receivable  will  be  debited  in  the  ledger. 

Cash  sales  should  be  checked  in  the  sales  book  as  soon  as  the  receipts  are  entered  in 
the  cash  book,  to  indicate  that  they  are  to  be  passed  over  when  the  sales  book  is  posted. 

The  total  of  the  sales  is  forwarded  from  page  to  page  until  the  date  of  posting,  at  which 
time  the  total  is  ruled  up,  as  illustrated  on  page  11 — fourth  page  of  sales  book.  The  total  of 
the  sales  will  be  posted  to  the  credit  of  Merchandise,  and  this  total  will  equal  all  of  the 
ledger  and  cash  book  debits  from  the  sales  book  for  the  given  period. 

—9- 


10 


ADVANCED  ACCOUNTING 


FIRST   PAGE  OF  THE  PURCHASE  BOOK 


tfe$ 


&e^£Z~S 


OO 


>/ 


^ 


*  x 


J-^  04&f 


<g*^4y 


/ \5~o    -STaL&soHiuy  c^j*4  JO 


QfiU^^U/      &*^%.  ^JU^^xf. 


J<6?-  j~0 


7 


<T/^ 


dTo 


>S~ 


/>  o 


jA 


^_ 


SECOND   PAGE  OF  THE  PURCHASE  BOOK   WITH   FIRST 


CLOSING 


jT 


L 


2-jT 


X 


CASH  BOOK  ENTRIES— CREDIT   SIDE— FROM  PURCHASE  BOOK 


^C^xa 


^ 


*s 


x  a  x  f  *  x 


/  9-e 


S~o 


LUMBER  ACCOUNTING 


Jl 


FIRST  PAGE  OF  THE  SALES  BOOK 


/f*7 


v* 


xx  x  * 


(E^J^C- 


V    2?   ?U.  /  JjL^fJU         V< 


* 


t^7  4-^-c-o-tSt^t-«j^ 


/  // 

/   9- 


'7\ 


0  / 


/'£ 


So 


So 


/</# 


zs- 


H 


Se 


FOURTH   PAGE  OF  THE  SALES  BOOK  WITH   FIRST   CLOSING 


e_y  a-A^cA>-t2L^t-i?\ 


X 


A 


*7 

V 0 


g/f 


s^> 

32 
6o 


f  *  fi 


/  c6n   T-r 


CASH  BOOK  ENTRIES— DEBIT  SIDE— FROM   SALES  BOOK 


^Jw^ 


6 


/¥S 

7° 


12 


ADVANCED  ACCOUNTING 


PROMISSORY  NOTES 

A  Promissory  Note  is  a  written  promise  to  pay  a  certain  sum  of  money  at  a  specified 
time. 

The  Parties  to  a  note  are  the  maker  and  payee.  The  maker  is  the  person  who,  by 
the  act  of  signing  the  note,  makes  a  promise.  The  payee  is  the  person  to  whom  the  note  is 
made  payable. 

The  following  is  a  commonly  used  form  of  promissory  note,  with  its  stub  which  should 
be  filled  out  by  the  maker  before  removing  the  note  from  the  book: 


rn    &  */  7tr;sjL~.. 


JZS£ 


Date  Jh™s-  '<?•  '?■ ' 

Time  fOt/jr/yJ 

Due    /7p6/r.  frf,  /?„     ■ . 

iJfo^Z $/S^ 


Surety.  A  surety  is  one  who  voluntarily  becomes  responsible  for  the  payment  of  a 
note  or  other  obligation,  either  by  signing  it  with  the  maker,  or  by  indorsement. 

A  surety  cannot  be  held  responsible  for  the  payment  of  an  obligation,  unless  all  reason- 
able and  legal  steps  have  been  taken  to  have  it  paid  by  the  maker.  It  must  be  presented  for 
payment  when  due,  or  within  a  reasonable  time  thereafter,  and  a  legal  certification  of  the 
fact  of  presentation  and  "dishonor"  or  refusal  to  pay,  must  be  made  in  due  form  through  a 
Notary  Public  or  other  qualified  officer.  Such  a  certification  is  called  a  protest,  and  it  must 
be  sent  to  each  surety  or  indorser,  whom  the  payee  intends  to  hold  responsible  for  the  pay- 
ment of  the  obligation.  The  obligations  for  which  a  surety  is  responsible  are  not  ordinarily 
considered  as  Bills  Payable,  since  the  surety  is  only  conditionally  responsible  for  their  pay- 
ment. 


FORM  OF 
BILLS 


Date  Recorded 

No. 

DRAWER  OR  INDORSER 

DRAWEE  OR  MAKER 

IN  WHOSE  FAVOR 

FOR  WHAT 

WHERE  PAY 

/fo  — 

Xo 

/ 

&.&-.  Qtlt^y 

3&^MZ^cU^h 

HnszLdJL* 

C-trvvJi    GArciL. 

0 

Xtf 

a 

<T.    V>.    t/^i^Co-^. 

.. 

//                  /, 

1 

i 

BILLS 


Date  Recorded 

No. 

DRAWER  OR  INDORSER 

DRAWEE  OR  MAKER 

IN  WHOSE  FAVOR 

FOR  WHAT 

WHERE  PAY 

/4 

/ 

■r/&JL/    /CLCCLcLe^nJ^ 

(v.    (rC.    >J-^^r^-i^cU^ 

~h^*LlJL; 

CW£.&rc4. 

V 

Iff 

ft 

1, 

C)ccl..     /Jcu^c/ 

fi^^^U- 

SkJL.  C3Jc 

jLnstsCfiS 

2. 

// 

II 

€*«£..    (gc^JL 

(Pj-.Cfe^ji^rho.  ZL 

U.   <3Jh 

(/ 

LUMBER  ACCOUNTING 


13 


Days  of  Grace.  In  some  states  the  maker  of  a  note  is  allowed  by  law  three  days  in 
which  to  pay  the  note,  after  the  date  of  maturity  specified  in  the  note.  These  additional 
days  are  called  days  of  grace.  If  you  live  in  a  state  in  which  days  of  grace  are  allowed, 
add  three  days  to  the  due  date  of  all  your  notes,  when  registering  them  in  your  Bill  Book. 

When  a  Note  is  Paid.  Upon  payment  of  a  note  in  full,  it  should  be  returned  to  the 
maker  with  the  word  "Paid"  written  or  stamped  across  the  face  by  the  payee  or  his  agent. 
The  maker  should  then  file  the  note  as  a  voucher,  showing  its  payment. 

Indorsement.  On  disposing  of  a  note  to  a  third  party,  the  payee  usually  indorses  it, 
in  order  to  authorize  the  person  who  receives  it  to  collect  it;  but  this  indorsement  renders 
the  payee  liable  for  the  payment  to  subsequent  holders,  unless  he  expressly  disclaims  lia- 
bility by  writing  the  words  "Without  Recourse,"  or  "I  hereby  disclaim  responsibility  for  the 
payment  of  this  note,"  or  words  of  similar  import  before  his  signature. 

Bills  Payable  and  Bills  Receivable.  In  bookkeeping,  all  notes  or  other  written  obli- 
gations to  pay  money,  that  are  made  by  the  proprietor  of  the  business,  are  known  as  Bills 
Payable,  while  all  notes  or  written  obligations  of  others,  and  owed  to  the  proprietor,  are 
called  Bills  Receivable. 

Bills  Receivable  are  resources,  while  Bills  Payable  are  liabilities. 

The  Note  Book  or  Bill  Book,  should  contain  an  itemized  list  of  all  notes  received  and 
issued  by  the  firm,  separate  columns  being  provided  for  every  item  of  information  required 
concerning  these  notes.  The  column,  when  due,  is  subdivided  into  special  columns  for  each 
month  of  the  year,  the  maturity  date  recorded  being  the  due  date,  including  days  of  grace 
when  such  days  are  allowed. 

Bills  Receivable  and  Bills  Payable  accounts  are  usually  kept  in  the  ledger,  the  note 
book  being  used  for  recording  detailed  information  concerning  each  note.  The  amount  of 
unpaid  notes  receivable  recorded  in  the  bill  book  should  agree  with  the  debit  balance  of 
Bills  Receivable  in  the  ledger,  and  the  amount  of  unpaid  notes  payable  in  the  bill  book 
should  agree  with  the  credit  balance  of  Bills  Payable  account  in  the  ledger. 


BILL  BOOK 

RECEIVABLE 


Datk 

TERM 

When  Due 

Int. 

Year 

Mo. 

Das 

Year 

i 

2 

3 

i 

6 

7 

8 

9 

10 

11 

12 

Disposed  of 

1  fo- 

n-ua^ 

J-o 

•J~  d-OA+iS 

/<?°- 

Z.5 

%$- 

■S-o 

0U.  &*//••- 

lio- 

i 

3L«^ 

a 

/qo- 

3 

/  ¥-0- 

7S 

&U.  %//<?*  - 

</ 

II 

y  /        -  ■ 

PAYABLE 

Date 

TERM 

When  Due 

AMOUNT 

Int. 

Whe>       v     H 

Year 

Mo. 

Daj 

Year 

1         2 

3 

4 

S 

6 

7 

8 

9 

10 

11 

12 

Disposed  of 

Ho- 

~hte^i 

/4 

/  O    cbujtL. 

/fo~ 

It, 

/A  f 

<5  o 

@L..  -7x(,//<7°  — 

/  JC- 

a 

IH 

0 

A3  cLojl^. 

/1°- 

X 

ifQS 

— 



(Pjl.  y*./n.  — 

(fo- 

9~s 

li 

0 

i°- 

"f- 

SLfZ. 

S~o 

!     7                      ■   ■- 

7 

U 

14  ADVANCED  ACCOUNTING 


THE  ESTIMATE  BOOK 

Another  very  important  historical  book,  peculiar  to  the  lumber  business,  is  kept  by  lum- 
ber dealers  who  make  estimates  to  architects  and  contractors  for  supplies  required  in  sep- 
arate buildings.  This  is  called  an  Estimate  Book,  each  estimate  having  the  two  pages  of  an 
open  folio.  The  left  page  is  subdivided  vertically  into  two  parts,  the  left  part  containing  a 
list  of  all  lumber  and  material  included  in  the  estimate,  with  the  prices  agreed  upon.  The 
right  part  of  this  page  contains  memoranda  of  lumber  delivered  as  it  is  required  for  the 
given  building,  the  date  and  quantity  being  recorded,  but  no  price  being  extended. 

It  frequently  happens  that  some  lumber  of  a  given  variety  is  left  over  after  completing 
the  building  and  is  returned  to  the  lumber  dealer  for  credit.  The  right  page  of  the  open 
folio  is  also  divided  vertically,  the  right  half  being  used  for  recording  contract  lumber  re- 
turned, and  for  varieties  included  in  the  estimate  that  were  not  required.  It  frequently  hap- 
pens that  extra  material  is  required  beyond  the  estimate,  and  the  left  half  of  the  second  page 
is  used  for  recording  extras  purchased  for  the  given  building. 

In  this  manner  lumber  and  building  material  pertaining  to  a  given  contract  may  be 
taken  in  loads  or  installments  from  day  to  day  during  the  time  required  to  complete  the 
building,  the  excess  lumber  can  be  returned,  extra  lumber  and  materials  can  be  secured  for 
the  given  building,  and  no  amount  will  be  extended  and  no  entry  will  be  carried  to  the 
regular  books,  unless  cash  payments  are  made  to  apply  on  the  contract,  until  the  given 
building  is  completed,  and  all  excess  lumber  has  been  returned. 

After  extending  and  footing  the  amounts  in  the  estimate  column,  the  amounts  in  the 
extra  column  are  extended  and  the  total  is  added  to  the  total  estimate.  The  credits  for  re- 
turned material  and  contract  material  not  taken  are  extended  at  contract  prices  and  the 
total  of  the  credit  column  is  deducted  from  the  total  of  estimates  and  extras.  The  remainder 
shows  the  net  amount  of  material  furnished  for  the  given  building.  This  amount  is  carried 
to  the  sales  book  without  itemizing,  as  Lumber  per  Estimate  No.  — ,  (giving  the  estimate 
number)  and  the  net  amount.  Sales  of  lumber  except  on  contracts  will  be  entered  in  the 
sales  book  at  the  time  of  sale,  like  the  first,  second  and  third  entries  in  the  model  sales  book. 

The  journal  is  only  used  for  the  opening  entries,  for  memoranda,  and  for  occasional 
transactions  that  cannot  be  recorded  in  the  other  books  used. 

The  student  is  already  familiar  with  the  cash  book  which  is  in  many  respects  the  most 
important  book  in  its  relation  to  the  business. 

The  note  book  in  the  present  business  gives  on  one  open  folio  an  itemized  list  of  all 
notes  received,  and  on  another  open  folio  a  similar  list  of  all  notes  issued  by  the  firm,  sepa- 
rate columns  being  provided  for  every  item  of  information  concerning  the  notes.  The  col- 
umn, when  due,  is  subdivided  into  special  columns  for  each  month  of  the  year,  the  maturity 
date  recorded  being  the  due  date,  including  days  of  grace  when  such  days  are  allowed. 

If  the  loose  leaf  blanks  are  used,  the  following  paper  will  be  required ;  In  the  Journal, 
Notes,  and  Cash  binder  1  sheet  journal  ruling  for  Journal,  1  sheet  B.  Rec.  and  B.  Pay  ruling 
for  Bill  Book,  3  sheets  journal  ruling  for  Cash  Book;  in  the  Purchase  and  Sales  binder  1 
sheet  journal  ruling  for  Purchase  Book,  3  sheets  journal  ruling  for  Sales  Book ;  in  the  Led- 
ger and  Trial  Balance  binder  5  sheets  two-account  ledger  ruling  with  index  sheet  for  Led- 
ger, 1  sheet  journal  ruling  for  Trial  Balances,  1  sheet  six-column  ruling  for  Balance  Sheets. 

ESTIMATING  LUMBER 

In  estimating  lumber,  the  unit  of  measure  is  a  board  one  inch  thick,  one  foot  wide,  and 
one  foot  long,  making  one  foot  of  lumber;  in  other  words,  a  foot  of  lumber  is  a  square  foot 
with  a  thickness  of  one  inch,  and  in  computing  all  dimensions  of  boards,  joists,  scantling, 
and  timbers,  we  virtually  reduce  them  to  inch  boards  and  then  find  the  number  of  square 
feet  in  each  board. 

If  the  width  of  lumber  were  given  in  feet  or  fractions  of  a  foot,  we  would  not  require 
a  special  rule ;  but  the  width  is  always  given  in  inches,  which  are  twelfths  of  a  foot.  Thus, 
an  inch  board  10  inches  wide  and  a  foot  long  would  contain  iVxlO=i$ft.  board  measure, 
and  if  it  were  12  ft.  long  it  would  contain  11x12=10  ft.  board  measure. 

If  the  board  were  ll/2  inches  thick,  there  would  be  one-half  more  lumber,  or  15  ft. ;  or 
if  2  inches  thick,  there  would  be  20  ft.  Lumber  sawed  less  than  one  inch  thick  is  counted 
the  same  as  inch  lumber  in  computing  the  number  of  feet,  board  measure. 


LUMBER  ACCOUNTING  15 


RULES  FOR  ESTIMATING  LUMBER 

1.  When  the  thickness  is  one  inch  or  less. 

Multiply  the  width  in  inches  by  the  length  in  feet,  and  divide  the  product  by  twelve. 
Or,  Multiply  the  width  in  feet,  or  twelfths  of  a  foot  by  the  length  in  feet. 

2.  When  the  thickness  is  more  than  one  inch. 

Multiply  the  thickness  in  inches  by  the  width  and  length,  the  latter  two  being  expressed 
in  feet  or  twelfths  of  a  foot. 

The  result  in  either  case  will  be  the  number  of  feet  of  lumber. 

The  process   of   cancellation  can  be   used  to  good  advantage  in  making  lumber  cal- 
culations. 

EXAMPLES 

1.  How  much  lumber  in  a  board  18  ft.  long,  8  in.  wide  and  1  in.  thick?  (1x8- — 18.) 

£_  X    4,    =.      /  2-  ^h 

2.  How  much  lumber  in  6  pieces  2x4  in.  and  16  ft.  long?     (6  pes.  2x4 — 16.) 


It  frequently  happens  that  the  result  in  a  computation  ends  in  a  fraction,  in  which  case 
the  "give  and  take"  rule  is  followed;  that  is,  if  the  fraction  is  one-half  or  more,  it  is  taken 
as  an  extra  foot ;  if  less  than  one-half,  it  is  dropped. 

Lumber  is  usually  estimated  and  quoted  by  the  thousand  feet,  board  measure.  Shingles 
by  the  thousand,  the  standard  shingle  being  4  inches  wide;  thus,  a  shingle  that  is  8  inches 
wide  will  be  counted  as  two  shingles  in  buying  or  selling.  Lath  are  estimated  by  the  thous- 
and. The  denomination  thousand  is  represented  by  the  Roman  character  M,  and  hun- 
dred by  C. 

EXAMPLES 

1.  What  is  the  value  of  753  ft.  Finishing  lumber  @  $37.50  ? 

2.  What  is  the  value  of  2,124  ft.  Flooring  @  $24? 

Logically,  in  the  second  example,  we  should  multiply  24  by  2,124 ;  but  for  convenience, 
we  multiply  2,124  by  24,  which  gives  the  same  product  in  the  abstract, 

(1)  (2) 

37.50  2.124 

.753  24 


11250  8496 

18750  4248 

26250 


50.976    Ans.  $50.98 
28.23750    Ans.  $28.24 

Since  lumber  is  usually  quoted  by  the  thousand  feet  and  the  quantity  sold  may  be  less 
than  a  thousand  feet,  we  would  suggest  the  following 

RULE  FOR  ESTIMATING  VALUE  OF  LUMBER 

Multiply  the  price  per  thousand  by  the  number  of  feet  expressed  decimally  as  thou- 
sandths. 

The  product  properly  pointed  off  will  give  the  value. 

In  the  present  set  the  student  will  keep  the  books  for  A.  M.  Porter  &  Co.,  the  trans- 
actions being  described  in  historical  memoranda  without  any  vouchers  or  papers. 


16  ADVANCED  ACCOUNTING 


MEMORANDA 
JUNE  1,  19— 

A.  M.  Porter,  Henry  Horton,  and  J.  C.  Simmons,  enter  into  partnership  this  day  as 
wholesale  and  retail  dealers  in  lumber  and  building  material,  each  partner  receiving  a  salary 
of  $125  per  month  and  each  sharing  in  the  net  gains  or  losses  in  proportion  to  his  net 
investment. 

A.  M.  Porter  invests  a  stock  of  lumber  and  building  material  inventoried  at  $9,752.50, 
two  teams  for  delivering  lumber  inventoried  at  $950,  and  office  furniture  inventoried  at 
$275.  Mr.  Porter  owes  the  following  wholesale  firms  and  the  new  firm  assumes  payment 
of  these  amounts:  Lane  &  Thomas,  Hastings,  $1,375.50,  Jones  &  Lambert,  Minneapolis, 
$2,653.25,  Harvey  &  Son,  Bellingham,  $948.75. 

Henry  Horton  invests  cash  $2000. 

J.  C.  Simmons  invests  cash  $4000. 

JUNE  2 

Paid  cash  for  postage  and  stationery  for  office,  $3.75. 

Sold  Henry  Trenton,  Toddville,  on  account: 

2000  feet  Hemlock  Ship  Lap  @  $24.00  per  M 

10  pes.  6x8—14,   Pine  @  25.00  "  " 

10  pes.  6x8—12,  Pine  @  25.00  "  " 

15  pes.  6x8—16,   Pine  @  25.00  "  " 

5  M  Lath  @  3.00  "  " 

Paid  cash  for  rent  of  barn  to  June  30  for  teams,  $7.50.     (Debit  Team  Expense.) 
Sold  J.  G.  Noyes,  on  his  note  at  20  days : 

3500  feet  Hemlock  Ship  Lap   @  $23.00   per  M 

Received  Invoice  of  posts  and  pickets  from  H.  B.  Morton  &  Co.,  Edgewood,  dated 
June  1,  amounting  to  $362.50,  billed  on  account  30  days  or  2  per  cent  10  days. 

Paid  the  Commercial  Railway  for  freight  on  above  invoice  of  posts  and  pickets,  $37.50. 

As  the  in-freight  on  lumber  is  an  essential  part  of  its  cost,  the  freight  paid  on  incoming  invoices  should 
be  entered  in  the  purchase  book  and  checked  in  the  cash  book.  In  an  extensive  business  it  might  be  desirable 
to  keep  a  separate  account  with  Freight,  in  which  case  the  freight  payments  would  not  appear  in  the  pur- 
chase book,  but  would  be  posted  to  the  ledger  from  the  cash  book. 

Sold  P.  J.  Franklin,  219  Second  Avenue,  for  cash: 


18  pes.  6x8—12  Hemlock 

@ 

$22.00  per  M 

40  pes.  2x4—12  Hemlock 

@ 

22.00     "    " 

16  pes.  6x6 — 16  Hemlock 

@ 

22.00     "    " 

12  pes.  4x6 — 18  Hemlock 

@ 

25.00     "    " 

1500  ft.  No.  1  Flooring 

@ 

35.00     "    " 

1250  ft.  Hemlock  Sheathing  @ 

20.00     "    " 

4  M  No.  1  Shingles 

@ 

4.25     "    " 

Enter  in  Sales  Book  and  Cash  Book  and  check  each  entry. 

Paid  Holton  Real  Estate  Co.  cash  for  1  month's  rent  of  lumber  yard  and  office,  $75. 

( Expense. ) 

JUNE  3 

Sold  G.  M.  Null,  180  Second  Avenue,  on  account :  s 

15  pes.  1^x16—16  No.  2   Pine     @  $45.00  per  M 

9  pes.  1^x16—18  No.  2  Pine     @  45.00  per  M 

500  ft.   ^-in.  Yellow  Pine  Ceiling   @  32.00  per  M 

Sold  H.  C.  White,  222  Third  Street,  for  cash : 

742  ft.  Common  Boards    @     $15.00  per  M 

1500  Lath  @         2.50  per  M 

Bought  an  invoice  of  lumber  of  J.  N.  Thomas,  Canton,  dated  June  1,  1908,  amounting 

to  $816.25,  giving  our  two  notes  for  same,  one  at  ten  days  for  $400  and  one  at  twenty  days 

for  $416.25.     Each  of  these  notes  draws  interest  at  six  per  cent  per  annum.      (See  third 

entry  in  Purchase  Book.) 


LUMBER  ACCOUNTING  17 


Paid  cash  to  the  Commercial  Railway  for  freight  on  invoice  from  Canton,  $139.75. 
Sold  G.  E.  Ellis  for  cash : 

850  feet  Maple  Flooring  @     $49.00 

24  pes.  2x8—16,  Pine  @       25.00 

Herefater  our  quotations  will  mean  per  thousand  feet  in  the  case  of  lumber  unless  a  different  denomi- 
nation is  specified  in  the  quotation. 

Bought  of  John  C.  Gay  for  cash  without  invoice : 

150  Railroad  Ties     @     80  cents 

Itemize  in  Purchase  Book  and  enter  in  Cash  Book,  checking  both  entries. 

Sold  R.  O.  Graves,  Webster,  on  account : 

30  pes.  2x6—16  Hemlock  @  $24.00 

4  M  No.  2  Shingles  @  3.75 

480  ft.  Hemlock  Sheathing  @  21.00 

Paid  cash  for  10  bales  hay  for  teams,  $5.50. 

Debit  "Team  Expense"  for  all  outlays  for  feed  and  care  of  teams,  repairing  wagons,  etc. 

Sold  E.  C.  Butler,  112  First  Street,  for  cash : 

1800  Lath                                            @  $3.75  per  M 

2  Doors  28x68xl^                         @  2.50  per  Door 

4  Windows  12x14,  8  lights,         @  1.75  per  Window 

Sent  cash  per  bank  draft,  $175.50  to  Lane  &  Thomas,  to  apply  on  their  account.  Paid 
cash  for  exchange  on  the  draft  15  cents. 

Made  the  following  estimate  to  L.  J.  Rickord  for  lumber  and  materials  for  dwelling,  to 
be  built  at  327  Fourth  Avenue,  the  supplies  to  be  delivered  as  he  may  send  for  them. 

48  pes.  2x12—12,  Pine  @  $27.00  11500'  No.  1  Fence  Flooring  @  $38.00 

8  pes.  2x12—14,  Pine  @  27.00  12000'  3d  Flooring  @  29.00 

14  pes.  8x  8—12,  Pine  @  27.00  6000'  No.  1  Siding  @  33.00 

200  pes.  2x10—20,  Pine  @  27.00  300'  4"  Crown,  per  foot  .03 

135  pes.  2x12—20,  Pine  @  29.00  1000'  %  Round,  per  C  .40 

160  pes.  2x  8—20,  Pine  @  26.00  69  Windows,  12x30,  4  ft.   w£jow  1.50 

250  pes.  2x  6—20,  Pine  @  26.00  5  Doors  28x68,  1%" ,  No.  2  @  2.00 

80  pes.  2x  2—12,  Pine  @  24.00  2  Doors  3x7,  1^",  No.  2  @  4.25 

1000'  6"  No.  1  Sheathing  @  27.00  11  Rolls  B.  Paper  @  .60 

13825'  2x6,  D.  &  M.  @  20.00  42  sq.  Rubberoid  Roofing  @  2.00 

In  writing  lumber  dimensions  the  accent  mark  (')  means  feet,  and  the  double  accent  (")  means  inches. 

In  estimating  board  feet  of  lumber,  it  is  customary  in  case  of  a  fractional  part  of  a  foot  to  drop  the 
fraction  if  less  than  J/2,  and  to  write  the  next  unit  higher  if  the  fraction  is  y2  or  more.  The  same  rule  will 
apply  also  to  fractional  parts  of  a  cent  when  written  in  the  money  columns. 

Copy  above  items  and  prices  in  the  Estimate  columns  on  the  left  side  of  the  first  open 
folio  of  your  estimate  book,  and  carry  out  the  extensions  in  the  proper  columns,  footing 
the  amount  column  and  entering  the  total  estimate. 

JUNE  4 

Bought  of  Henry  Roberts,  R.  F.  D.  No.  17,  on  account  without  invoice : 

200  Railway  Ties     @     80  cents 

Paid  Jones  &  Lambert's  demand  draft  on  us  for  $153.25,  to  apply  on  account. 
Sold  to  M.  I.  Martin,  239  Fifth  Avenue,  on  account: 

20  pes.  2x  4—12,  Pine  @  $27.00 

30  pes.  2x  8—16,  Pine  @  27.00 

16  pes.  2x  6—18,  Pine  @  28.00 

20  pes.  2x10—20,  Pine  @  28.00 


18 


ADVANCED  ACCOUNTING 


LEFT  FOLIO   OF  THE  ESTIMATE  BOOK 


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Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue : 

48  pes.  2x12—12,  Pine 

6  pes.  2x12—14,  Pine 

100  pes.  2x12—20,  Pine 

Enter  these  in  "Delivered"  column  of  Rickord's  estimate.     (See  model  Estimate  Book.) 

Received  cash  from  Henry  Trenton  to  apply  on  his  account,  $50. 

Paid  cash  for  shoeing  horses,  $2.50.      (Team  Expense.) 

Sold  to  E.  C.  Martin,  for  cash : 

4  pes.  1x10—14  4th  Finishing  @  $44.00 
8  pes.  1x10—18  4th  Finishing  @  44.00 
2  pes.  1x10—16  Ship  Lap  @     30.00 

600  ft.  6"  Hemlock  Sheathing  @     20.00 

2  M  5/2  Red  Cedar  Shingles        @       4.25 

Received  invoice  of  Red  Cedar  Shingles  from  Harvey  &  Son,  Bellingham,  dated  June 
3  and  billed  on  account,  $275.25. 

Paid  cash  to  the  Commercial  Railway  for  freight  on  the  last  invoice,  $74.75. 

JUNE  5 

Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue: 

12  pes.  8x  8—12,  Pine 
150  pes.  2x10—20,  Pine 
Sold  H.  Orton,  Belleville,  on  account,  car  No.  9763  Commercial  Railway,  freight  un- 
paid: 

4000  ft.  No.  1  Fencing  @     $22.50 

100  pes.  2x6—16,  Pine  @       25.00 

50  pes.  2x8—16,  Pine  @       25.00 

2  M  3-inch  Pickets  (a)       17.50 


LUMBER  ACCOUNTING 


19 


RIGHT  FOLIO   OF  THE  ESTIMATE  BOOK 
^/Jwellinq,  327  ^j/ourtn  t^s£ti>enue,   K^itu. 


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Received  cash  from  G.  M.  Null  to  apply  on  his  account,  $15. 

Bought  of  Henry  Roberts,  R.  F.  D.  No.  17,  on  account  without  an  invoice : 

150  Railway  Ties  @     80  cents 

100  Split  Fence  Posts    @     25  cents 

Handed  C.  E.  Jones,  of  Jones  &  Lambert,  cash  to  apply  on  their  account,  $100. 

Sold  O.  M.  Gray,  on  his  note  at  20  days,  bearing  interest  at  6  per  cent: 

36  pes.  2x  8—16,  Hemlock  @     $24.00 

28  pes.  2x12—16,  Hemlock  @       25.00 

48  pes.  2x  4—12,  Hemlock  @       23.00 

3  M  cut  Shingles  @         5.00 

Paid  cash  for  office  books,  $5.25. 

Received  cash  from  J.  G.'  Noyes  to  apply  on  his  note,  $25. 

Sold  Henry  Trenton,  Toddville,  on  account : 

1500  ft.  #1  Flooring  i 

900  ft.  #1  Yellow  Pine  Ceiling    i 

15  pes.  I%x6 — 12,  Cypress         i 


$36.00 
32.00 
58.00 


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JUNE  6 

Paid  cash  for  premium  on  insuring  your  stock  of  lumber  for  $4000  for  one  year,  $60. 

If  you  carried  large  insurance,  you  would  want  a  ledger  account  with  Insurance.     In  the  present  set  the 
insurance  transactions  will  not  be  frequent,  and  they  can  be  carried  to  Expense. 

Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue. 

50  pes.  2x10—20,  Pine 

35  pes.  2x12—20,  Pine 

80  pes.  2x  2—12,  Pine 


20  ADVANCED  ACCOUNTING 


Sold  C.  E.  Jones,  1329  Madison  Street,  on  account : 

40  pes.  2x4—18,  Hemlock  @  $28.00 

18  pes.  2x8—14,  Hemlock  @  24.00 

24  pes.  2x6—16,  Hemlock  @  24.00 

6  pes.  1^x12—16  Finishing  @  60.00 

Received  invoice  of  Hemlock  Lumber  from  Lane  &  Thomas,  Hastings,  dated  June  3, 
billed  on  account,  $392.55. 

Sold  Henry  Cushman  for  cash : 

1500  ft.  10"  #1  Hemlock  Ship  Lap  @  $25.00 

40  pes.  2x6—14,  Hemlock  @     23.00 

1450  ft.  6"  2d  Siding  @     28.00 

Paid  cash  to  the  Commercial  Railway  for  freight  on  the  last  invoice  from  Lane  & 
Thomas,  $79.95. 

Made  the  following  estimate  to  H.  C.  Johnson  for  lumber  and  materials  for  dwelling,  to 

be  erected  at  292  Grand  Boulevard,  the  supplies  to  be  delivered  as  he  may  send  for  them : 

65  pes.  2x4—12,  Hemlock          @  $25.00  300  ft.  Com.  Flooring                   @  $34.00 

8  pes.  6x6—14,  Hemlock         @     28.00  4  pes.  2x12—12,  Hemlock       @     30.00 

4  pes.  6x6—12,  Hemlock          @     28.00  60  pes.  2x  4—16,  Hemlock       @     25.00 

4  pes.  4x6—14,  Hemlock          @     28.00  60  pes.  2x  4—14,  Hemlock       @     25.00 

1800  ft.  8  in.  Com.  Drop  Siding    @     33.00  1750  ft.  No.  1  Hem.  Ship  Lap       @     27.00 

900  ft.  Hemlock  Sheathing           @     23.00  120  ft.  12  in.  Stock  Boards          @     35.00 

8  M  6/2  R.  C.  Shingles            @       3.50  12  pes.  2x  6—14,  Hemlock       @     27.00 

13  pes.  2x8—14,  Hemlock          @     25.00  3  pes.  1x12—16,  Stock             @     35.00 

22  pes.  2x8—12,  Hemlock          @     25.00  10  Barn  Sash,  8x10,  4  lights,  per  sash    .60 

Copy  above  items  and  prices  as  Estimate  No.  2  on  the  second  open  folio  of  your  esti- 
mate book.     Carry  out  the  extensions  and  record  the  total  estimate. 
Paid  cash  for  wages  of  workmen  in  the  yard,  $27.50. 

In  a  large  business  requiring  the  subdivision  of  Expense  account  this  outlay  would  be  charged  to  Yard 
Expense.  In  the  present  business  a  general  Expense  account  will  be  sufficient  for  all  outlays  of  this  class  ex- 
cept outlays  for  the  teams,  already  provided  for. 

The  cash  on  hand  and  in  bank  at  this  time  amounts  to  $5378.12. 

Delivered  to  L.  J.  Rickord  for  dwelling,  327  Fourth  Avenue,  but  not  included  in  his 
estimate : 

213  ft.  2  d  Ship  Lap  @     $30.00 

Enter  this  in  Extras  in  estimate  book. 

Foot  your  purchase  book  and  sales  book,  preparatory  to  posting. 

Accountants  make  it  a  rule  to  arrange  the  general  accounts  in  the  ledger  as  nearly  as 
possible  in  alphabetical  order.  Every  account  should  be  indexed  when  given  a  place  in  the 
ledger. 

For  the  sake  of  uniformity,  the  ledger  accounts  should  be  opened  in  the  following  order, 
each  account  having  a  half  page  unless  otherwise  stated.  The  arrangement  we  have  given 
classifies  the  ledger  into  three  groups — general  accounts,  purchase  accounts,  and  sales  ac- 
counts. 

First  Group — A.  M.  Porter,  Henry  Horton,  J.  C.  Simmons,  Bills  Payable,  Bills  Receiv- 
able, City  Railway  Stock,  Collateral  Cash,  Collaterals,  Discount,  Interest,  Expense  (page), 
Merchandise,  Office  Furniture,  Out-Freight,  Team  Expense,  Teams,  Loss  and  Gain  Closing. 

Second  Group — Lane  &  Thomas,  Jones  &  Lambert,  Harvey  &  Son,  H.  B.  Morton, 
Henry  Roberts,  Simmons  &  Co. 

Third  Group — Henry  Trenton,  G.  M.  Null,  R.  O.  Graves,  M.  I.  Martin,  H.  Orton,  C.  E. 
Jones,  Central  Construction  Co.,  L.  J.  Rickord.  H.  C.  Johnson,  C.  E.  Turner. 

Post  your  ledger  to  date  from  the  original  books  in  the  following  order :  Journal,  Pur- 
chase Book,  Sales  Book,  Cash  Book.  The  terms  of  each  purchase  should  be  entered  in  the 
explanation  column  of  the  ledger  for  reference  in  paying  bills. 

Balance  your  cash  book  and  take  a  trial  balance,  recording  the  same  in  your  trial  bal- 
ance book. 


LUMBER  ACCOUNTING  21 


JUNE  8 

By  mutual  agreement  of  the  partners,  A.  M.  Porter  has  reduced  his  net  investment  by 
withdrawing  cash,  $2000. 

Bought  of  Henry  Roberts,  R.  F.  D.  No.  17,  on  account  without  invoice : 
225  Railway  Ties  @     80  cents 

Paid  Henry  Roberts,  cash  on  account,  $100. 

Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue : 

160  pes.  2x8—20,  Pine 
25  pes.  2x6—20,  Pine 
2500  ft.  No.  1  Siding 

Paid  cash  for  new  office  desk,  $22.50. 

Sold  G.  M.  Null,  180  Second  Avenue,  on  account : 

1500  ft.  4-in.  2d  Siding  @     $33.00 

50  pes.  2x8—18,  Pine  @       26.00 

Jones  &  Lambert  have  sent  us  a  statement  showing  balance  due  them  on  account  $2400, 
and  offering  a  cash  discount  of  three  per  cent  for  immediate  payment.  Accepted  their  propo- 
sition and  sent  them  a  bank  draft  for  net  balance  due  them  after  deducting  the  discount  pro- 
posed.    Gave  cash  for  the  draft  and  also  for  exchange  on  the  draft,  30  cents. 

Such  a  discount  transaction  can  be  entered  through  the  cash  book,  on  the  credit  side  debiting  Jones  & 
Lambert  for  the  full  amount  of  their  account,  $2400,  and  on  the  debit  side  crediting  Discount  for  the  amount 
deducted. 

In  case  of  the  payment  in  full  of  a  personal  account,  it  is  good  bookkeeping  to  post  the  debit  or  credit 
at  once  to  the  ledger  account  and  rule  up  the  account  as  closed,  even  if  it  is  to  be  opened  again  for  new 
transactions.  The  closing  of  a  personal  account  marks  the  agreement  of  both  parties  and  the  adjustment  of 
all  entries  in  the  account  above  the  closing  lines. 

In  posting  an  entry  before  the  regular  posting  period,  care  should  be  taken  to  enter  the  proper  post- 
marks to  avoid  second  posting  of  such  an  entry. 

Received  invoice  of  dimension  lumber  from  Simmons  &  Co.,  Austin,  dated  June  6,  and 
billed  at  2  per  cent  for  10  days,  net  at  30  days,  the  invoice  amounting  to  $319.25. 
Sold  the  Central  Construction  Co.,  Franklin,  on  account: 

725  Railway  Ties  @     $1.05 

Paid  cash  to  the  Commercial  Railway  for  freight  charges  on  invoice  of  Simmons  & 
Co.,  $76.25,  and  for  prepaid  freight  charges  on  our  shipment  to  the  Central  Construction 
Co.,  $72.50. 

Follo'v  previous  instructions  regarding  entry  for  freight  charges  on  incoming  invoices.  Freight  on  sales 
shipments  does  not  properly  belong  to  cost  of  merchandise,  but  should  be  charged  to  "Out-Freight,"  if  it  oc- 
curs frequently,  or  to  "Expense"  if  only  occasional  small  payments  are  made.  In  this  set  an  account  will  be 
opened  with  "Out-Freight"  for  payments  of  this  kind. 

Delivered  to  L.  J.  Rickord  for  dwelling  327  Fourth  Avenue,  but  not  included  in  esti- 
mate : 

4  pes.  8x  8—14,  Pine  s  4  s  @     $30.00 

25  pes.  2x  6—26,  Pine  (S)       30.00 

40  pes.  2x12—20,  Hem.  @       29.00 

Dimension  lumber,  such  as  2x4,  4x4,  2x6,  2x8,  etc.,  usually  is  delivered  without  being  planed  or  sized. 
If  planed  on  one  side,  it  is  marked  s  1  s,  on  two  sides,  s  2  s,  on  four  sides,  s  4  s. 

Made  sundry  small  sales  of  lumber  for  cash  without  billing,  $27.25. 
Enter  in  sales  book  in  one  line  without  itemizing,  "Sundry  Cash  Sales." 

Delivered  to  H.  C.  Johnson,  on  estimate  for  dwelling,  292  Grand  Boulevard: 

30  pes.  2x4—12,  Hemlock 
4  pes.  6x6 — 12,  Hemlock 
4  pes.  4x6 — 14,  Hemlock 
800  ft.  8-in.  Common  Drop  Siding 

Enter  in  Delivered  column  of  estimate  No.  2. 


22  ADVANCED  ACCOUNTING 


Received  cash  from  H.  Orton  on  account,  $100. 
Sold  R.  O.  Graves,  Webster,  on  account: 

24  pes.  2x8—14,  Yellow  Pine        @  $24.00 

40  pes.  2x8—16,  Yellow  Pine        @     24.00 

80  pes.  2x4—18,  Yellow  Pine       @     24.00 

50  pes.  2x6—16,  Yellow  Pine        @     24.00 

2400  ft.  10-in.  Ship  Lap  @     22.00 

Paid  cash  to  the  Commercial  Railway  for    freight   charges   on   the   last   out-shipment, 

$17.25. 

Gave  Henry  Trenton  a  special  discount  of  $2.35  and  collected  cash  for  the  balance  of 
his  account,  $150. 

Post  your  books  hereafter  at  the  close  of  each  date,  except  the  total  sales  and  purchases,  which  will  be 
posted  when  you  are  required  to  take  the  next  trial  balance;  Personal  accounts  should  be  ruled  up  when  in 
balance. 

JUNE  9 

Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue : 

2000  ft.  No.  1  Siding 

640  ft.  6-inch  No.  1  Sheathing 
2400  ft.  3d  Flooring 

40  Windows,  12x30,  4  light 
Collected  cash  of  G.  M.  Null  on  account,  $25. 
Sold  Henry  Trenton,  Toddville,  on  account: 

100  Split  Fence  Posts  @  30  cents  each 
100  pes.  2x4—16,  Pine  @  $25.00 
1600  3-in.  Pickets  @  $15.00  per  thousand  pickets 
Deducted  2  per  cent  cash  discount  on  balance  due  Harvey  &  Son,  June  1,  (Porter's  in- 
vestment) and  sent  them  a  bank  draft  for  the  proceeds,  paying  cash   for  the  draft  and   for 
exchange  on  the  draft,  25  cents. 

As  this  is  not  a  settlement  in  full,  the  entry  will  not  be  posted  until  the  regular  posting  period. 

Delivered  to  H.  C.  Johnson  on  his  estimate  for  292  Grand  Boulevard : 

13  pes.  2x8—14,  Hemlock 

12  pes.  2x8—12,  Hemlock 
750  ft.  No.  1  Hem.  Ship  Lap 
Received  cash  from  R.  O.  Graves  on  account,  $30. 

Received  invoice  of  hard  wood  lumber  from  Jones  &  Lambert,  Minneapolis,  dated  June 
6,  and  billed  at  3  per  cent  ten  days,  net  sixty  days,  the  invoice  amounting  to  $613.25. 
Made  sundry  sales  of  lumber  for  cash  without  billing,  $36.25. 
Received  cash  from  L.  J.  Rickord,  $75,  to  apply  on  his  account. 
This  will  post  to  Rickord's  credit  in  the  ledger,  and  will  not  appear  in  the  estimate  book. 

Paid  cash  to  the  Commercial  Railway  for  freight  on  Jones  &  Lambert's  invoice  of  lum- 
ber, $125.75. 

Sold  to  Central  Construction  Co.,  Franklin,  on  account: 

20  pes.  4x4—18,  Hemlock  @  $24.00 

100  pes.  2x6—12,  Hemlock  @     23.00 

50  pes.  2x4—18,  Hemlock  @     23.00 

4500  ft.  10-in.  Hemlock,  Ship  Lap   @     25.00 
3200  ft.  Fence  Flooring  @     38.00 

Paid  cash  to  the  Commercial  Railway  for  prepaid  freight  charges  on  last  sale,  $27.75. 
Received  cash  from  J.  G.  Noyes  for  balance  of  his  note,  $55.50. 
Sold  C.  E.  Jones,  1329  Madison  St.,  on  account: 

2500  ft.  4-in.  2d  Siding  @  $33.00 

2800  ft.  10-in  Hemlock  Ship  Lap    @     25.00 
To  accommodate  J.  N.  Thomas,  of  Canton,  we  have  sent  him  cash  per  draft,  $200,  to 
apply  on  our  note  due  June  13. 

Enter  in  the  cash  book  and  interline  in  the  paid  column  of  notes  payable. 


LUMBER  ACCOUNTING  23 


JUNE   10 

Made  the  following  estimate  to  C.  E.  Turner  for  lumber  and  materials  for  dwelling,  to 
be  erected  at  416  Park  Avenue,  the  supplies  to  be  delivered  as  he  requires  them: 

96  pes.  2x8—14,  Yellow  Pine    @  $21.00         1400  ft.  3-in.  Y.  P.  Flooring     @  $42.00 

75  pes.  2x6—16,  Yellow  Pine    @     21.00  800  ft.  ^-in.  Y.  P.  Ceiling      @     25.00 

150  pes.  2x4—18,  Yellow  Pine    @     22.00  980  ft.  8-in.  2d  Ship  Lap  @     25.00 

100  pes.  2x4—10,  Yellow  Pine    @     21.00  8  Windows,  12x28,  4  light  @       2.00 

2800  ft.  10-in.  Ship  Lap  @     20.00  2  Doors  28x68xl%  @       2.50 

3500  ft.  6-in  Sheathing  @     19.00  4  Doors  26x68xl^  @       2.25 

17  M  5-2  R.  C.  Shingles  @       4.00  150  ft.  4-in.  Crown  Molding  per  ft.     .02^ 

2400  ft.  4-in.  2d  Siding  @     28.00  320  ft.  y4  Round,  per  ft.  .00^ 

800  ft.  4-in.  3d  Finishing  @     50.00  150  lbs.  Tar  Felt,  per  lb.  .03 

Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue : 

5700  ft.  No.  1  Fence  Flooring 
3700  ft.  3d  Flooring 

Lane  &  Thomas  have  drawn  on  us  in  three  drafts,  one  for  $400  payable  on  demand,  one 
for  $400  at  15  days  sight,  and  one  for  $400  at  30  days  sight,  for  the  balance  of  their  credit 
of  June  1,  less  the  payment  we  made  June  3.  We  have  paid  the  demand  draft  and  ex- 
change on  same,  40  cents,  and  have  accepted  the  two  time  drafts. 

Enter  the  payment  of  the  demand  draft  in  the  cash  book  and  journalize  the  acceptance  of  the  time 
drafts,  entering  the  acceptances  in  notes  payable. 

Sold  to  J.  C.  Brown,  223  Fifth  Avenue,  for  cash : 

556  ft.  6  in.  Sheathing  @  $22.00 

12  pes.  2     x8— 14,  Pine  @     26.00 

25  pes.  2     x4— 18,  Hemlock  j@     27.00 

2  pes.  I>4x6— 10,  Cypress  @     57.00 

Delivered  to  H.  C.  Johnson  on  his  estimate  for  292  Grand  Boulevard: 
1000  ft.  8-in.  Common  Drop  Siding 
6  M  6-2  R.  C.  Shingles 
4  pes.  2x12—12,  Hemlock 
60  pes.  2x  4 — 16,  Hemlock 
60  pes.  2x  4—14,  Hemlock 
1000  ft.  No.  1  Hemlock  Ship  Lap 
12  pes.  2x  6—14,  Hemlock 

Received  cash   from  Central  Construction  Co.,  $250,  to  apply  on  account. 
Sold  M.  I.  Martin,  239  Fifth  Avenue,  on  account: 

750  ft.  6-in.  2d  Siding  @  $35.00 

50  pes.  1x8—16,  Hemlock  Ship  Lap   @     27.00 

Received  an  invoice  of  finishing  lumber  from  H.  B.  Morton,  Edgewood,  dated  June  9, 
and  billed  at  2  per  cent  ten  days,  net  thirty  days,  the  invoice  amounting  to  $472.28. 

Delivered  to  L.  J.  Rickord  for  dwelling  327  Fourth  Avenue,  but  not  included  in  esti- 
mate : 

6  ft.  Oak  Threshold  @    '5  cts.  per  foot 

10  ft.  2-in.  yA  Round  @     2  cts.  per  foot 

Paid  cash  to  the  Commercial  Railway  for  freight  on  the  invoice  from  H.  B.  Morton, 
$67.25. 

Paid  cash  for  repairs  on  one  of  the  wagons  used  for  delivering  lumber,  $2.75. 
Made  sundry  sales  of  lumber  for  cash  without  billing,  $31.50. 

Delivered  to  H.  C.  Johnson  for  dwelling  292  Grand  Boulevard,  but  not  included  in 
estimate : 

8  pes.  2x6—16,  Hemlock  @  $25.00 

6  pes.  2x6—12,  Hemlock  @     25.00 

200  ft.  3d  Finishing  @     50.00 


24  ADVANCED  ACCOUNTING 


Received  cash  from  L.  J.  Rickord,  $100,  to  apply  on  account. 

Sold  E.  E.  Sanford,  Benton,  on  his  note  at  ten  days  with  interest  from  date  at  six  per 
cent: 

50  pes.  2x8—16,  Pine,  s  2  s  @  $28.00 

100  pes.  2x4—12,  Pine  @     27.00 

60  pes.  2x6—12,  Pine  @     27.00 

8000  ft.  3d  Flooring  @     30.00 

500  ft.  Y.  P.  Flooring  @     40.00 

Paid  cash  to  the  Commercial  Railway  for  prepaid  freight  charges  on  last  sale,  $31.50. 

JUNE  11 

Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

96  pes.  2x8—14,  Yellow  Pine 

75  pes.  2x4—18,  Yellow  Pine 

75  pes.  2x6 — 16,  Yellow  Pine 

50  pes.  2x4—10,  Yellow  Pine 

Received  cash  from  H.  C.  Johnson,  $50,  to  apply  on  account. 

A  ledger  account  will  be  required  for  H.  C.  Johnson,  the  same  as  for  L.  J.  Rickord. 

Sold  G.  M.  Null,  180  Second  Avenue,  on  account : 

24  pes.  2x8—14,  Hemlock        @  $26.00 

800  ft.  Common  Flooring  @     34.00 

60  pes.  2x4—16,  Hemlock        @     26.00 

Bought  of  Henry  Roberts,  R.  F.  D.  No.  17,  on  account : 

150  Railway  Ties  @     85  cents 

Received  two  notes  from  the  Central  Construction  Co.  to  balance  their  account,  both 
notes  being  dated  June  11,  and  drawing  interest  from  date  at  six  per  cent,  the  first  note  at 
ten  days  for  $390,  and  the  second  note  at  fifteen  days  for  $400.  We  have  discounted  the  bal- 
ance of  their  account. 

Enter  in  journal  and  notes  receivable,  post  the  debits  and  credits  of  the  Central  Commission  Co.,  and 
rule  up  their  account. 

Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue : 

360  ft.  6-in.  No.  1  Sheathing 
300  ft.  4-in.  Crown  Molding 
350  ft.'K  Round 
3000  ft.  3d  Flooring 
12500  ft.  2x6,  D.  &  M. 
5800  ft.  No.  1  Fence  Flooring 

Sent  our  note  at  fifteen  days  for  $200  to  H.  B.  Morton,  to  apply  on  account. 
Delivered  to  H.  C.  Johnson  for  dwelling  292  Grand  Boulevard,  but  not  included  in 
estimate : 

10  pes.  2x  4—10,  Hemlock  (S)  $26.00 

20  pes.  2x10—12,  Hemlock  @     28.00 

Received  cash  from  M.  I.  Martin  to  apply  on  account.  $50. 

Made  sundry  sales  of  lumber  for  cash  without  billing,  $28.25. 

Received  invoice  of  Hemlock  lumber  from  Simmons  &  Co.,  Austin,  dated  June  9,  and 
billed  at  two  per  cent  ten  days,  net  thirty  days,  the  invoice  amounting  to  $416.28. 

O.  M.  Gray,  with  our  permission,  has  paid  his  note  of  $64.66,  before  it  falls  due,  also 
paying  interest  on  the  note  for  six  days  at  the  given  rate. 

Paid  cash  to  the  Commercial  Railway  for  freight  on  the  invoice  of  Simmons  &  Co., 
$92.29. 


LUMBER  ACCOUNTING  25 


Sold  E.  A.  Porter,  365  North  Avenue,  receiving  his  note  at  20  days  without  interest 
for  $50,  and  cash  for  the  balance : 

120  pes.  2x4—12,  Hemlock  @  $22.00 

60  pes.  2x6—16,  Hemlock  @     24.00 

3000  ft.  10-in.  Hemlock  Ship  Lap    @     24.00 

2200  ft.  6-in.  2  d  Siding  @     28.00 

300  ft.  yA-'m.  Y.  P.  Ceiling  @     32.00 

Sold  Gordon  &  Co.,  Huntsville,  Car  No.  9763,   Com.   Ry.,   receiving  cash  $64.28,  and 

their  note  at  10  days  for  balance : 

4  M  No.  1  Fencing  @  $27.00 

100  pes.  2x6—16,  Pine,  s  2  s  @     28.00 

120  pes.  2x8—16,  Pine,  sis  @     28.00 

80  pes.  4x4—14,  Pine,  s  4  s  @     28.00 

2  M  3-inch  Pickets  @     24.00 

Deducted  the  discount  offered  in  Simmons  &  Co.'s  invoice  of  June  8,  and  sent  them  cash 
per  draft  to  pay  the  proceeds  of  this  invoice,  also  paying  cash  for  exchange  on  the  draft,  40 
cents. 

Borrowed  cash,  $900,  of  the  Exchange  Bank  on  our  collateral  note,  payable  on  or  be- 
fore 30  days  with  interest  at  six  per  cent  from  date,  leaving  as  security  the  following  notes 
which  the  bank  will  collect  for  us : 

Notes  of  Central  Construction  Co $790 

Note  of  Gordon  &  Co 250 

Such  a  transaction  is  called  a  Collateral  Loan,  and  the  collateral  note  will  be  entered  as  a  note  payable. 
When  we  deliver  notes  receivable  to  the  bank  as  collateral,    we    should    make    a    journal    entry    debiting 
"Collateral"  and  crediting  Bills  Receivable. 

JUNE  12 

As  an  accomodation  to  Henry  Horton,  who  needs  $500  cash  for  personal  use,  we  have 
bought  of  him  five  shares  of  City  Railway  Stock  at  par,  paying  him  cash  for  same,  $500. 
Open  a  ledger  account  with  City  Railway  Stock,  debiting  it  for  the  cost. 
Received  cash  from  C.  E.  Turner,  $100,  to  apply  on  account. 
Turner  will  also  require  a  ledger  account. 

Delivered  to  H.  C.  Johnson  on  his  estimate  for  292  Grand  Boulevard : 

300   ft.    Common   Flooring 
900  ft.  Hemlock  Sheathing 
Paid  cash  to  the  Commercial  Railway  for  prepaid  freight  charges  on  the  shipment  to 
Huntsville,  June  11,  $38.75. 

Received  invoice  of  Doors  and  Windows  from  Harvey  &  Son,  Bellingham,  dated  June 
10  and  billed  at  2  per  cent  fifteen  days,  net  sixty  days,  the  invoice  amounting  to  $415.20. 
Delivered  to  L.  J.  Rickord  on  his  estimate  for  327  Fourth  Avenue : 

1325  ft.  2x6  D.  &  M. 
650  ft.  yA  Round 

29  Windows,  12x30,  4  light 

30  Squares  Rubberoid  Roofing 
Received  cash  for  sundry  sales  of  lumber  without  billing,  $42.16. 

Paid  cash  to  the  Commercial  Railway  for  freight  on  Harvey  &  Son's  invoice  of  lum- 
ber, $65.25. 

Sold  M.  I.  Martin,  239  Fifth  Avenue,  on  account : 

3000  ft.  6-in.  Hemlock  Sheathing     @  $21.00 

15  M  cut  Dimension  Shingles        @       4.50 

6  columns  5x5 — 9,  per  column  1.50 

8  windows  12x28,  4  light,  per  window   2.00 

4  doors  26x68xl^,  per  door  2.75 

120  ft.  4-in.  Crown  Molding,  per  ft.  .03 

600  ft.  3  d  Finishing  @     50.00 


26  ADVANCED  ACCOUNTING 


Paid  cash  for  hay  and  straw  for  teams,  $7.50. 

Delivered  to  H.  C.  Johnson  for  dwelling  292  Grand  Boulevard,  but  not  included  in 
estimate: 

15  pes.  1x8—16,  Drop  Siding        @  $28.00 

20  pes.  1x6—12,  Hemlock  @     23.00 

900  ft.  Common  Flooring  @     34.00 

Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

75  pes.  2x4—18 
50  pes.  2x4—10 
1500  ft.  10-in.  Ship  Lap 

JUNE  13 
Delivered  to  L.  J.  Rickord  on  his  contract  for  327  Fourth  Avenue : 

4  Doors  28x68xl^  No.  2 
2  Doors  3x7x1^4  No.  2 
12  Squares  Rubberoid  Roofing 

Also  delivered  to  L.  J.  Rickord  for  same  building,  but  not  included  in  estimate : 
600  ft.  ^-in.  Yellow  Pine  Ceiling     @  $25.00 

Received  from  the  Commercial  Railway  cash  for  overcharge  on  freight  shipment  to 
Huntsville,  June  12,  $5.25. 

Credit  this  to  Out-Freight. 

Harvey  &  Son  have  discounted  2  per  cent  from  their  invoice  of  June  3  and  have  drawn 
on  us  on  demand  for  the  proceeds  of  the  invoice  which  we  have  paid,  also  paying  for  ex- 
change on  the  draft,  30  cents. 

L.  J.  Rickord  has  returned  for  credit  on  his  estimate  for  327  Fourth  Avenue : 

500  ft.  No.  1  Fence  Flooring 
25  ft.  4-in.  Crown 
50  ft.  yA  Round 

Enter  these  in  credit  column  at  prices  estimated. 

Delivered  to  H.  C.  Johnson  on  his  estimate  for  292  Grand  Boulevard : 

120  ft.  12-in.  Stock  Boards 
3  pes.  1x12—16,  Stock 
10  Barn  Sash,  8x10,  4  light 

Sold  to  the  Central  Construction  Co.,  Franklin,  on  account : 

150  Railway  Ties  @  $  1.10 

100  pes.  8x8—18,  Hemlock  @     26.00 

Paid  cash  to  the  Commercial  Railway  Co.  for  prepaid  freight  charges  on  the  shipment 
to  Franklin,  $33.55. 

Received  cash  from  R.  O.  Graves  on  account,  $50. 

Sold  one  of  our  teams  (two  horses,  harness,  and  wagon)  to  Henry  Shepard  for  $500, 
receiving  cash  $250  and  his  note  at  30  days  without  interest  for  the  balance. 

Compound  Journal  entry. 

Delivered  to  H.  C.  Johnson  for  dwelling  292  Grand  Boulevard,  but  not  included  in 
his  estimate  * 

3  pes.  1^x12—14,  Stop  @  $60.00 

4  pes.  1x8—14,  Finishing  @     45.00 

Received  cash  from  L.  J.  Rickord  on  account,  $200,  and  he  reports  that  no  more  supplies 
will  be  required  for  327  Fourth  Avenue.  Enter  in  "credits"  the  undelivered  supplies  in  esti- 
mate.    Close  the  estimate  and  carry  the  net  amount  to  the  sales  book  as  a  sale  on  account. 


LUMBER  ACCOUNTING  27 


Received  cash  from  C.  E.  Jones  on  account,  $100. 
Paid  cash  for  wages  of  workmen  in  yard,  $22.75. 
Delivered  to  E.  C.  Turner  on  his  estimate  for  416  Park  Avenue : 

1200  ft.  10-in.  Ship  Lap 

1800  ft.  6-in  Sheathing 

The  cash  on  hand  and  in  bank  at  this  time  amounts  to  $581.92. 

Post  your  books,  including  total  sales  and  purchases,  and  take  a  trial  balance. 

JUNE  15 

Received  cash  from  L.  J.  Rickord  on  account,  $200. 

Sold  R.  C.  Gandy,  Galena,  Commercial  Railway,  Car  No.  2916,  receiving  cash  $84.56 
and  his  note  at  12  days  with  interest  at  six  per  cent  for  balance : 

125  pes.  2x12—20,  Pine  @  $30.00 

60  pes.  2x  6—20,  Pine  @     30.00 

80  pes.  2x  8—18,  Pine  @     28.00 

50  pes.  2x12—16,  Pine  @     28.00 

Paid  H.  B.  Morton  cash  for  balance  of  his  invoice  entered  June  2,  $162.50. 
Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

1700  ft.  6-in.  Sheathing 

15  M  5-2  R.  C.  Shingles 
2400  ft.  4-in.  2  d  Siding 
900  ft.  8-in.  Ship  Lap 

Received  cash  from  E.  A.  Porter  in  payment  of  his  note,  $50. 

Paid  cash  to  the  Commercial  Railway  for  prepaid  freight  charges  on  our  last  shipment 
to  Galena,  $29.92. 

Paid  J.  N.  Thomas  cash  for  balance  of  our  first  note,  $200,  and  interest  due  on  same. 
Use  the  regular  partial  payment  rule  in  computing  this  interest,  estimating  6  days'  interest 
before  the  first  payment,  and  6  days'  interest  on  balance  due  after  first  payment. 

Received  invoice  of  flooring  from  Lane  &  Thomas,  Hastings,  dated  June  12,  and  billed 
at  3  per  cent  ten  days,  net  thirty  days,  the  invoice  amounting  to  $520.16. 
Received  cash  for  sundry  sales  of  lumber  without  billing,  $41.50. 
H.  C.  Johnson  has  returned  for  credit  on  his  estimate  for  292  Grand  Boulevard : 

250  ft.  No.  1  Hemlock  Ship  Lap 

20  ft.  12-in.  Stock  Boards 
200  ft.  8-in.  Common  Drop  Siding 

Paid  cash  to  the  Commercial  Railway  for  freight  on  Lane  &  Thomas's  invoice  of  lum- 
ber, $73.72. 

Received  cash  from  G.  M.  Null  on  account,  $9.75. 

JUNE  16 

Drew  on  H.  Orton,  Belleville,  at  sight,  for  balance  of  his  account  and  left  the  draft  at 
the  Exchange  Bank  for  collection. 

Make  pencil  memorandum  in  ledger,  credit  side  of  Orton's  acct.  "St.  Draft  6-16  Exch.  Bk.  for  Col. 
$91.68."    Do  not  carry  any  amount  to  the  money  columns,  as  the  draft  has  not  been  paid  yet. 

If  drafts  were  drawn  frequently  on  customers  for  collection,  they  would  be  recorded  in  a  collection  regis- 
ter with  proper  rulings  for  all  data  pertaining  to  the  collections,  and  in  such  case  would  not  require  pencil 
memoranda  in  the  ledger. 

Received  a  cash  dividend  of  four  per  cent  on  our  City  Railway  Stock,  $20. 

Paid  cash  for  Jones  &  Lambert's  invoice  of  June  9,  less  the  discount  they  offer. 

L.  J.  Rickord  has  settled  his  account  in  full,  giving  us  cash  $396.31,  a  note  for  $400  at 
six  days  with  interest  at  six  per  cent,  and  a  note  for  the  balance  of  his  account  at  twelve  days 
with  interest  at  six  per  cent. 

As  this  final  transaction  involves  cash  and  bills  receivable,  make  a  compound  journal  entry,  crediting 
Rickord  in  full  from  the  journal  and  checking  the  cash  entry.     Post  and  rule  up  Rickord's  account. 


28  ADVANCED  ACCOUNTING 


Sold  C.  E.  Jones,  1329  Madison  Street,  on  account : 

2400  ft.  3  d  Flooring  @  $30.00 

60  pes.  2x8—16,  Hemlock  @     26.00 

1200  ft.  Drop  Siding  @     34.00 

Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

750  ft.  4-in.  3  d  Finishing 
1400  ft.  3-in.  Yellow  Pine  Flooring 
8  Windows  12x28,  4  light 

Received  cash  from  H.  C.  Johnson  on  account,  $50,  and  he  reports  that  no  more  sup- 
plies will  be  required  for  292  Grand  Boulevard.  Enter  in  "credits"  the  undelivered  supplies 
in  estimate.  Close  the  estimate  and  carry  the  net  amount  to  the  sales  book  as  a  sale  on 
account. 

Received  cash  for  sundry  small  sales  of  lumber  without  billing,  $39.29. 

Paid  cash  for  books  and  stationery  for  the  office,  $6.75. 

JUNE  17 

Paid  cash  to  Henry  Roberts  on  account,  $205. 

The  Exchange  Bank  have  collected  our  draft  on  H.  Orton  and  have  paid  us  the  amount 
of  the  draft  less  25  cents  kept  out  for  collection  charges. 

Make  the  required  entries  in  the   cash  book,   crediting  Orton  in  full  and  debiting  Expense  for  the  collection. 

Received  invoice  of  dimension  lumber  from  Jones  &  Lambert,  Minneapolis,  dated  June 
13  and  billed  at  3  per  cent  ten  days,  net  sixty  days,  the  invoice  amounting  to  $278.75. 
Sold  R.  O.  Graves,  Webster,  Commercial  Railway,  Car  19654,  on  account: 

48  pes.  1x16—18,  Finishing  @  $50.00 

40  pes.  1^x12—16,  Finishing  @     48.00 

20  M  5-2  R.  C.  Shingles  @       4.25 

20  Doors  28x68xl^,  per  door  2.25 

150  pes.  2x6—14,  Pine,  s  2  s  @     28.00 

Paid  cash  to  the  Commercial  Railway  for  freight  on  Jones  &  Lambert's  invoice  of  lum- 
ber, $53.75,  and  for  prepaid  freight  charges  on  the  shipment  to  Webster,  $22.35. 

Borrowed  cash,  $800,  of  the  Exchange  Bank  on  our  collateral  note,  payable  on  or  be- 
fore 30  days  with  interest  at  six  per  cent  from  date,  leaving  as  security  the  two  notes  of 
L.  J.  Rickord  for  $1000,  which  the  bank  will  collect  for  us. 

Proceed  as  in  former  collateral   note    (June  11). 

Paid  Simmons  &  Co.  cash  per  check  for  their  invoice  received  June  8,  less  the  discount 
they  offer. 

Received  cash  for  sundry  small  sales  of  lumber  without  billing,  $42.38. 

Gave  the  Central  Construction  Co.  a  discount  of  2  per  cent  for  immediate  payment  of 
their  bill  of  June  13,  receiving  cash  for  the  balance. 

Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

800  ft.  ^-in.  Yellow  Pine  Ceiling 
And  for  the  same  building,  but  not  included  in  the  estimate : 

1000  ft.  6-in.  No.  1  Sheathing  @  $21.00 

1250  ft.  No.  1  Fence  Flooring  @     40.00 

JUNE  18 

Sold  our  5  shares  of  City  Railway  stock  to  G.  A.  Clews  for  cash,  $550. 

Paid  Henry  Roberts  cash  on  account,  $180. 

Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

2  Doors  28x68xl^ 
4  Doors  26x68xl^ 


LUMBER  ACCOUNTING  29 


Received  cash  from  H.  C.  Fenton  for  desk  space  in  office,  $10. 

Sold  A.  R.  Foote,  R.  F.  D.  No.  29,  receiving  cash,  $22.90,  and  his  note  at  30  days  with- 
out interest  for  balance : 

900  ft.  4"  2d  Siding  @  $30.00 

200  ft.  4"  3  d  Finishing  @     50.00 

600  ft.  3"  Yellow  Pine  Flooring  @     42.00 

1200  ft.  8"  2  d  Ship  Lap  @     28.00 

36  pes.  2x4—14,  Hemlock  @     22.00 

48  pes.  2x8—14,  Hemlock  @     22.00 

Delivered  to  C.  E.  Turner  for  dwelling  No.  416  Park  Avenue,  but  not  included  in  esti- 
mate : 

5  M  4-in.  Hemlock  Lath  @  $  5.10 

38  pes.  2x6—12,  Yellow  Pine  @     21.00 

40  ft.  2-in.  Bed  Molding,  per  ft.  .02 

Paid  H.  B.  Morton's  sight  draft  on  us  for  balance  of  his  account,  after  deducting  a  dis- 
count of  2  per  cent,  the  face  of  the  draft  being  $462.83. 

Post  and  rule  up  Morton's  account. 

JUNE   19 

Received  cash  from  Henry  Shepard  in  payment  of  his  note  due  July  13,  on  which  we 
have  allowed  a  discount  of  $1  for  payment  before  maturity. 

This  kind  of  discount  is  properly  classed  as  interest,  as  it  is  an  allowance  of  6  per  cent  interest  on  the 
note  for  the  length  of  time  to  maturity. 

Paid  cash  for  feed  for  teams,  $3.50. 

Delivered  to  C.  E.  Turner  on  his  estimate  for  416  Park  Avenue : 

150  ft.  4"  Crown  Molding 
300  ft.  y4  Round 
150  lbs.  Tar  Felt 

Received  cash  from  C.  E.  Turner  on  account,  $75. 

Lane  &  Thomas  have  offered  us  a  discount  of  2  per  cent  on  their  invoice  received  June 
6,  if  paid  at  once,  and  we  have  accepted  their  offer  and  have  sent  them  cash  per  draft  for  the 
proceeds  of  the  invoice  after  discount.     Also  paid  cash  for  exchange  on  the  draft,  40  cents. 

Sold  E.  C.  Pinney,  224  Grand  Avenue,  for  cash : 

24  pes.  2x4—18,  Hemlock  @  $28.00 

600  ft.  Maple  Flooring  @     49.00 

10  pes.  1x10—14,  Yellow  Pine       @     48.00 

JUNE  20 

The  Exchange  Bank  reports  the  collection  of  the  Central  Construction  Co.'s  note  $390 
and  interest  on  same  65  cents.  They  will  keep  this  cash  in  a  special  fund  until  you  settle 
your  first  collateral  note. 

Do  not  enter  this  cash  in  your  cash  book,  as  the  cash  is  not  now  in  your  possession.  Make  a  journal 
entry  debiting  Collateral  Cash  and  crediting  Collaterals  and  Interest. 

Delivered  to  C.  E.  Turner  for  dwelling  No.  416  Park  Avenue,  but  not  included  in  his 
estimate : 

5  pes.  1x8—18,  4th  Finishing         @  $44.00 
25  lbs.  Tar  Felt,  per  lb.  .03 

Received  cash  from  G.  M.  Null  on  account,  $80.70. 

Sent  cash  per  draft  to  Jones  &  Lambert,  to  pay  their  invoice  of  June  13,  less  the  dis- 
count they  offered.    Also  paid  cash  for  exchange  on  the  draft,  30  cents. 


30  ADVANCED  ACCOUNTING 


Received  cash  from  the  Commercial  Railway    for   overcharge    on   last   shipment   from 
Minneapolis,  $10,  and  for  overcharge  on  our  last  shipment  to  R.  O.  Graves,  of  Webster,  $5. 
Paid  cash  for  wages  of  workmen  in  yard,  $14.50. 
The  cash  on  hand  and  in  bank  at  this  time  amounts  to  $785.12. 
i      Post  your  books,  including  total  sales  and  purchases,  and  take  a  trial  balance. 

JUNE  22 

Received  cash  from  E.  E.  Sanford  in  payment  of  his  note  now  past  due,  $330.92,  and 
for  interest  on  same  from  date  at  the  rate  named. 

C.  E.  Turner  has  paid  us  cash  on  his  account,  $100,  and  has  returned  for  credit  on  his 

estimate:  20  pes.  2x4—18,  Yellow  Pine 

200  ft.  6-in.  Sheathing 

Turner  reports  that  no  more  supplies  will  be  required  for  416  Park  Avenue.  Enter  the 
undelivered  supplies  in  "credits"  and  close  the  estimate  in  the  usual  manner. 

Paid  Lane  &  Thomas  cash  for  invoice  of  June  12,  less  their  offered  discount. 

Received  cash  for  sundry  small  sales  of  lumber  without  billing,  $38.80. 

The  Exchange  Bank  reports  the  payment  of  Rickord's  note  for  $400,  left  with  them  as 
collateral,  and  40  cents  interest  on  same. 

JUNE  23 

Received  cash  from  H.  C.  Johnson  on  account,  $88.73. 

Paid  cash  for  our  note  favor  J.  N.  Thomas,  $416.25,  with  interest  from  date  at  the 
given  rate. 

Settled  in  full  with  M.  I.  Martin,  receiving  cash  $39.08,  and  his  note  at  10  days,  with 
interest 'at  six  per  cent,  for  $200. 

Sold  to  J.  A.  Parker,  Parkerville,  Commercial  Railway,  Car  No.  9221,  for  cash : 

10  pes.  6x  6-48,  Hemlock  @  $27.00 

60  pes.  2x12—18,  Pine  @     28.00 

80  pes.  2x  6—18,  Pine  @     28.00 

120  pes.  2x  4—16,  Hemlock  @     27.00 

4000  ft.  Common  Flooring  @     34.00 

Paid  cash  for  Lane  &  Thomas's  note  due  June  25,  $400. 
Received  cash  from  C.  E.  Jones  on  account,  $90.42. 

JUNE  24 

Received  cash  from  H.  Trenton  on  account,  $80.68. 

Paid  cash  to  the  Commercial  Railway  for  prepaid  freight  charges  on  our  shipment  to 
Parkerville  yesterday,   $21.75. 

The  Exchange  Bank  reports  the  collection  of  Gordon  &  Co.'s  note  left  with  them  as  col- 
lateral, $250. 

Received  cash  for  sundry  small  sales  of  lumber  not  billed,  $42.24. 

JUNE  25 
Sent  cash  per  draft  to  Harvey  &  Son  to  pay  their  invoice  received  June  12,  less  the  of- 
fered discount,  also  paying  cash  for  exchange  on  the  draft,  50  cents. 
Received  cash  from  G.  M.  Null  to  apply  on  account,  $55.49. 

Sold  G.  A.  Camp,  Sterling,  Commercial  Railway,  Car  No.  4998,  discounting  5  per  cent 
from  quoted  prices  and  collecting  cash  for  the  bill : 

120  pes.  2x  8—14,  Hemlock  @  $22.00 

50  pes.  2x  6—16,  Hemlock  @     22.00 

200  pes.  2x  4—16,  Hemlock  @     22.00 

200  pes.  2x10—20,  Pine  @     27.00 

200  pes.  2x  6—20,  Pine  @     26.00 

3000  ft.  No.  1  Siding  @     33.00 

As  this  discount  is  allowed  on  the  original  bill,  the  total  of  the  sale  should  be  written  in  the  first 
column  in  the  sales  book  and  the  discount  should  be  deducted  and  only  the  net  amount  after  discount  should 
be  extended  to  the  second  column. 


LUMBER  ACCOUNTING  31 


JUNE  26 

The  Exchange  Bank  reports  the  collection  of  the  Central  Construction  Co.'s  note  for 
$400,  left  with  them  as  collateral,  and  $1  interest  on  same. 

As  the  last  transaction  closes  the  collection  of  the  first  set  of  collaterals,  we  have  taken 
up  our  collateral  note  favor  the  Exchange  Bank  for  $900  and  fifteen  days'  interest  on  same 
at  given  rate,  and  have  received  collateral  cash,  $139.40. 

The  cash  received  from  collateral  cash  goes  into  the  regular  funds  and  should  appear  in  the  cash  book 
as  a  cash  debit. 

Received  cash  for  sundry  small  sales  of  lumber  not  billed,  $38.55. 

JUNE  27 

Received  cash  from  R.  O.  Graves  on  account,  $82.86. 

Paid  cash  for  our  note  favor  H.  B.  Morton,  $200. 

Received  cash  for  sundry  cash  sales  of  lumber  not  billed,  $85.82. 

Received  cash  from  R.  C.  Gandy  for  his  note,  $200,  and  twelve  days'  interest  at  the 
given  rate. 

Paid  cash  for  workmen's  wages  in  yard,  $12.75. 

JUNE  28 

The  Exchange  Bank  reports  the  collection  of  Rickord's  note  left  with  them  as  collat- 
eral, $600,  and  thirteen  days'  interest  on  same  at  the  given  rate. 

We  have  taken  up  our  collateral  note  favor  the  Exchange  Bank  for  $800  and  twelve 
days'  interest  on  same  at  the  given  rate,  and  have  received  from  the  bank  the  balance  of  our 
collateral  cash. 

JUNE  29 

Paid  each  partner's  salary  for  one  month. 

The  cash- on  hand  and  in  bank  amounts  to  $818.09. 

Post  your  books,  including  total  sales,  and  take  a  trial  balance. 

The  following  inventories  have  been  taken,  in  preparation  for  a  balance  sheet : 

Lumber  and  building  materials  $11186.09 

Teams  515.00 

Office  Furniture  285.00 

Books,  stationery,  and  postage  8.75 

Make' a  six-column  balance  sheet,  showing  present  interest  of  each  partner,  after  which 
close  all  ledger  accounts  except  those  with  persons,  Bills  Receivable,  and  Bills  Payable. 

Prove  your  Bills  Receivable  and  Bills  Payable  accounts  with  your  bill  book  entries. 


32  ADVANCED  ACCOUNTING 


QUESTIONS  FOR  REVIEW 

1.  What  is  meant  in  business  by  the  term,  statement? 

2.  What  is  a  statement  of  account?    A  depositor's   statement?     A   bank   statement? 
A  financial  statement  ? 

3.  What  is  a  balance  sheet? 

4.  What  three  general  forms  of  balance  sheets  are  used  by  accountants?     In  what 
respect  do  they  differ? 

5.  Explain  the  use  of  the  purchase  book  and  give  its  advantages. 

6.  What  account-title  is  credited  for  a  purchase  for  cash? 

7.  What  account-title  is  credited  for  a  purchase  on  account? 

8.  What  account-title  is  credited  for  a  purchase  on  note  signed  by  us? 

9.  What  debit  entry  will  equal  all  of  the  purchase  book  credits? 

10.  Explain  the  use  of  the  sales  book  and  give  its  advantages. 

11.  What  account-title  is  debited  for  a  sale  for  cash? 

12.  What  account-title  is  debited  for  a  sale  on  account? 

13.  What  account-title  is  debited  for  a  sale  on  note  in  our  favor? 

14.  What  credit  entry  will  equal  all  of  the  sales  book  debits? 

15.  What  is  a  promissory  note,  and  what  parties  pertain  to  a  note? 

16.  Explain  the  use  of  the  bill  book. 

17.  Define  bills   receivable.      Define  bills  payable. 
.18.  Explain  the  use  of  the  estimate  book. 

19.  What  is  the  unit  of  measure  in  estimating  lumber? 

20.  Give  the  rule  for  computing  dimension  lumber. 

21.  Give  the  rule  for  estimating  the  value  of  lumber. 

22.  When  an  account  is  discounted  and  paid,  how  can  the  discount  be  entered  in  the 
cash  book? 

23.  When  should  personal  accounts  be  closed? 

24.  What  distinction  is  there  in  accounting  between  freight  on  incoming  invoices  and 
prepaid  freight  on  sales? 

25.  What  is  the  effect  of  accepting  a  draft  drawn  on  your  own  firm? 

26.  How  can  discount  dates — dates  when  bills  can  be  discounted — be  shown  in  the 
ledger  ? 

27.  What  ledger  account  should  be  kept  with  bills  receivable  left  at  the  bank  as  col- 
lateral security  for  bills  payable? 

28.  How  is  Collateral  Cash  account  closed? 

29.  How  is  Collateral  account  closed? 


Business  Forms. 


The  following  business  forms  should  be  studied  carefully  by  the  student  before  he  at- 
tempts to  write  the  papers  and  forms  that  are  required  in  the  course  in  Business  Practice. 

RECEIPTS 

A  receipt  is  a  written  acknowledgement  that  the  maker  has  received  into  his  possession 
money  or  other  property  from  the  person  to  whom  the  receipt  is  given. 

A  receipt  should  always  be  required  when  money  is  paid  on  account,  and  the  receipt 
should  state  clearly  the  purpose  of  the  payment.  Receipts  should  be  carefully  filed  and  never 
destroyed  until  there  is  no  longer  any  possibility  that  they  may  be  wanted. 


j^L*^  ^J2/y^.  (2 — . ,  y  /&    Jti .  . 


$/£>& 


For — Co^c^etz^^u^. 


-^*~  "tr't^"'"/' 


S>~3^r  S    &  ^-  -*-~r~-r~r^*^ 


^A. 


$/<?^- 


&7t?.  te„rt^. 


The  above  is  a  common  form  of  receipt.  It  shows  that  Henry  T.  Miller,  being  indebted 
to  C.  M.  Hunter,  has  paid  $10.65  of  the  debt,  and  that  Mr.  Hunter  acknowledges  this  pay- 
ment. The  form  shows  the  receipt,  with  the  accompanying  stub,  before  the  receipt  is  re- 
moved from  Mr.  Hunter's  receipt  book. 

That  portion  of  the  form  to  the  left  of  the  receipt  is  called  the  "Stub."  It  supplies  the 
maker  of  the  receipt  with  a  record  of  the  date,  amount,  to  whom  given,  and  purpose  of  the 
receipt. 

At  the  time  of  writing  a  receipt,  always  fill  out  the  stub  before  removing  the  receipt 
from  the  book. 

BANK  DEPOSITS 

It  is  customary  for  business  men  to  keep  their  money  "on  deposit"  in  banks,  and  to  draw 
out  or  pay  out  this  money  when  required,  by  means  of  orders  on  the  bank,  called  "Checks." 

A  Deposit  is  a  sum  of  money  or  other  funds,  placed  in  a  bank  and  subject  to  check  by 
the  depositor. 

A  Bank  Balance  is  the  amount  of  money  due  the  depositor,  and  it  is  equal  to  the  sum 
of  all  his  deposits,  less  the  sum  of  all  his  checks. 


DEPOSITOR'S  SIGNATURE 

The  person  opening  a  bank  ac- 
count is  required  to  leave  his  signa- 
ture at  the  bank  in  the  exact  form 
that  he  will  use  in  signing  checks, 
notes,  and  other  commercial  papers. 
This  signature  may  be  recorded  in  a 
signature  book  kept  by  the  bank,  or 
it  may  be  written  on  a  card  giving 
the  same  information. 

The  card  is  more  convenient  and 
is  rapidly  coming  into  use  in  place  of 
the  signature  book.  If  the  depositor 
is  introduced  to  the  banker  by  an- 
other person,  the  name  of  the  latter 
is  also  recorded  on  the  card. 


FORM  OF  SIGNATURE  CARD 

NAME  OF  CORPORATION.  FIRM   OR  INDIVIDUAL. 


For  THE  EXCHANGE  BANK,  Clinton,  Iowa 


Signatures  and  by  whom  made 


(^A^/3^7^^y 


Address       /  ^^^^V^2^/ 


Introduced  by  <^p%?  /S^^UST*^ 
-33— 


34 


ADVANCED  ACCOUNTING 


Form  of  Deposit  Ticket,  Currency     Form  of  Deposit  Ticket,  Checks 


MAKING  A  DE- 
POSIT 


Only. 

EXCHANGE  BANK. 


and  Currency. 

EXCHANGE  BANK. 


The  depositor 
the  funds  to 
be  deposited  on  a 


DEPOSITED  BY 


a^utt~cG*J 


form  called  a  de- 
posit ticket  (some- 
times also  called 
a     deposit     slip) 


@&*?^£t^*$^Q&**^T 


19 


^^  DEPp&ITED  BY 


Currency . 


this  Coin 

the  Other  Items 

de- 

the 
of- 
the 


Uit  Weeks  and  Drills. 


/  o  o  o 


Other  Item* 


OitCkKkiu<0ri0f. 


/  O  O   O 


37  fo 


?  06   J£~ 


and     passes 

ticket,     with 

funds    to    be 

posited,      to 

proper    bank 

ficer    (usually 

Receiving  Teller) , 

who     counts     the 

money     and     the 

checks,  if  any,  to 

see      that      the 

amount  agrees  with  the  amount  given  on  the  deposit  ticket.     If  it  is  found  to  be  correct,  the 

bank  clerk  enters  the  amount  of  the  deposit  in  the   depositor's    Pass   Book,   as   shown   in   the 

accompanying  form. 

If  there  are  several  checks  or  drafts  to  be  deposited,  the  amounts  of  these  papers  are 
entered  in  the  first  set  of  columns,  and  their  total  is  extended  to  the  last  set  of  columns,  as 
illustrated  in  the  second  form  of  Deposit  Ticket. 

FORM  OF  PASS  BOOK 


Currency . 


Coin. 


/<f/ 


Dr. 

EXCHANGE  BANK, 

In  Acc't 

With  c- 

—rCs 

.?r7..t^^^z^&^ 

-^  c 

f. 

0M. 

/o 

/yjzjb^i*^ — 

/ooct 

. 

BANK  CHECKS 

A  Bank  Check  is  a  written  order,  by  means  of  which  a  depositor  authorizes  the  bank  to 
pay  out  money  to  the  person  named  in  the  check. 

Checks  may  be  written  payable  to  order  or  payable  to  bearer.  It  is  better  to  make  them 
payable  to  the  order  of  the  person  you  wish  to  pay,  so  that  he  may  be  required  to  indorse 
his  name  on  the  back  of  the  check  when  the  bank  pays  him.  The  paid  checks  are,  at  a  later 
date,  returned  by  the  bank  to  the  person  who  wrote  them,  and  he  can  then  file  them  away  as 
receipts  showing  that  he  made  the  payments. 

Parties  to  a  Check.  The  person  who  issues  the  check  is  known  as  the  drawer.  The 
Bank  upon  which  the  check  is  drawn  is  known  as  the  drawee  or  payer,  and  the  person  in 
whose  favor  the  check  is  drawn  is  called  the  payee. 

The  Check  Book.  The  check  blanks  are  usually  bound  in  books,  each  check  having 
a  blank  on  the  left  margin,  called  the  stub,  in  which  a  record  is  kept  of  all  facts  pertaining 
to  the  check  issued.  The  checks  are  printed  in  different  styles,  some  check  books  having 
only  a  single  check  on  a  sheet  or  leaf,  and  others  having  two  or  more  checks  on  a  leaf. 


BUSINESS  FORMS 


35 


The  Check  Stub.  The  check  stub  enables  the  drawer  of  the  check  to  record  the  date 
and  number  of  the  check,  to  whom  given,  for  what  given,  and  the  amount.  The  deposit 
and  bank  balances  may  also  be  shown,  as  illustrated  in  the  following  form. 


Explanation — The  above  form  represents  a  single  check  with  the  entry  in  the  stub.  A 
deposit  of  $300  had  been  made  before  the  check  was  written.  In  this  check,  J.  B.  Caldwell 
is  the  payee,  the  student  is  the  drazver,  and  the  Students'  Commercial  Bank  is  the  payer  or 
drawee. 

As  in  the  case  of  a  receipt,  the  stub  of  the  check  should  always  be  filled  out  before  the 
check  is  removed  from  the  book,  and,  unless  there  is  urgent  haste,  the  balance  should  also  be 
forwarded  at  the  same  time. 

The  form  below  illustrates  two  consecutive  checks  from  the  check  book  of  Samuel  R. 
Adams.     In  this  book  there  are  two  checks  on  a  page. 

The  stub  entries  may  be  made  on  the  double  checks,  the  same  as  on  the  single  check, 
already  illustrated;  but  the  special  rulings  for  the  stub  entries  illustrate  a  more  convenient 
form,  especially  where  there  are  several  checks  on  a  sheet. 

The  totals  of  the  checks  and  deposits  are  entered  at  the  bottom  of  each  page  of  the  check 
stub  when  the  last  check  on  the  page  is  drawn,  and  forwarded  to  the  top  of  the  next  page 
when  another  check  is  drawn.  Thus,  in  the  following  checks  the  stub  of  No.  26  shows  that 
there  had  been  a  total  of  $75.50  deposited  when  that  check  was  drawn,  and  another  deposit 
made  of  $50,  the  total,  $125.50,  being  entered  at  the  bottom  of  the  page. 


CHECKS  FORD 


% 


To 


/&Lm,.%:*&*y.. 


For 


N..J^ 

To 

.(jLl^jl, 


J&!l^ttM^jZ(^&< 


V 


yo 


Garden  City  Bank 


q%g&Gf^%r^r 


.fa/**  _ 


r^cs-r^r^/tis-  -*-r**^-r-~i  - 


IS  COLLSOE  CCKJtEXl 


Garden  City  Bank 


■pfc^T— - 


^^^^^^-*-^/^-£i^  Of^>Co^r>  ^*S 


36 


ADVANCED  ACCOUNTING 


HOW  TO  INDORSE  A  CHECK 

To  indorse  a  check  or  other  paper,  is  to  write  one's  name  on  the  back.  This  should  be 
done  across  the  left  end  of  the  paper.  When  checks  or  other  commercial  papers  are  pre- 
sented at  the  bank,  either  for  payment  or  deposit,  they  should  be  indorsed  by  the  payee. 

A  CHECK  INDORSED 


A  DEPOSITOR'S  STATEMENT 

At  the  end  of  each  month,  or  more  frequently  if  desired,  the  bank  returns  the  checks 
they  have  paid  for  the. depositor,  with  a  statement  sheet  listing  the  paid  checks,  and  also 
giving  the  deposits  and  the  balance  in  bank  to  the  credit  of  the  depositor.  The  form  below 
represents  a  depositor's  monthly  statement. 

DEPOSITOR'S  STATEMENT 

Statement  of  Account       ^^^^€/ndw^^^<<^/  isr.v  ' 

L^^£^<^C^-/^^  Z^_J/ouchers  returned. 

in  account  with        THE,  EXCHANGE  BANK 


OAKLAND 


No.    Day 


<^?/l 


^ 


lA 


3^ 


^h 


rs 


LjkJU. 


*9- 


yi 


/A 


-UL 


jAl 


*& 


f-  I'J 


Lt£ 


4- 


> 


0<f 


,s 


£Z 


f 


6 


No. 


Day 


£, 


U2 


■£ 


&/ 


±^r 


J^o 


DEPOSITS 


Day 


Balance 


f 


/J~ 


W 


■4. 


3^4. 


Credits 


Debits 


Balance 


/i^V^ 


ti-f 


b 


/  -yi 


£ 


^r 


% 


1 


re 


S  'f  f 


J~fS 


J~ti*7 


i£££/ 


± 


JT 


% 


J" 


szf 


/S 


Please  examine  balances  and  vouchers  and  report  at  once  if  any  error  is-  found. 


BUSINESS  FORMS 


37 


FORMS  OF  INDORSEMENT 

Indorsements  are  entries  written  on  the  back  of  any  paper.  They  are  either  a  transfer 
of  title,  a  giving  of  security,  or  a  receipt  for  a  payment  applying  on  the  contract  indorsed. 

When  a  paper  is  written  payable  to  the  order  of  John  Sones,  and  he  wishes  to  transfer 
his  title  to  Henry  Sherwood,  he  writes  on  the  back  of  the  paper  an  order  for  its  payment  to 
Sherwood. 

For  the  convenience  of  bank  tellers,  and  others  who  have  large  numbers  of  such  in- 
dorsed papers  to  handle  daily,  it  is  well  to  write  the  indorsement  across  the  left  end  of  the 
paper. 

On  negotiable  papers  that  are  likely  to  have  several  indorsements,  care  should  be  taken 
to  write  the  indorsements  as  close  together  as  is  convenient.  If  the  back  of  the  paper  should 
be  covered  with  indorsements,  other  indorsements  can  be  written  on  blank  paper  attached  to 
the  original. 

MODEL  FORMS   OF  INDORSEMENT 


>*. 

\__ 

C         l-l 

b 

o 

^~n 

O    TO 

ffi  ft 

,-s 

Sherwood, 
course. 
HN  Sones 

W 
ft 

(A 

w 

>  O 

M 

o 

u    ft 

3 

Q 

«oi 

O 

m 

ft 
W 

5 

so 

o 
m 

<v    ft 

•  <o 

°  o 

O 

k 

S  o 
o1— > 

^ 

<U    O 
>>  C.  i — , 

o 

3  o 
O  i— i 

v  8 

o 

TO     j_ 

in 

3 

-to 

Pay  to  Hen 
order,  without 

•*s 

•*o 

1*4 
g 

o 

co  o 
c 

V. 
C) 

'5- 

TO 


O    C 


c 
Or 


£  °  8 

o  c  o 

-M      TO    "+"1 


r/5 

W 

ft 

o 

'  , 

r/) 

"^3 

5b 

fc 

.§ 

W 

0 

o 

£ 

i— » 

bjo 

Ho 

«? 

«4i 

-to 

O 

*v 

5^ 

■§  * 

^   O 

£  en 

o  o 


Referring  to  the  Model  Forms  of  Indorsements  above.  A  transfers  the  ownership  from 
Sones  to  Sherwood,  and  makes  Sones  responsible  to  Sherwood  in  case  the  maker  or  payer  of 
the  paper  fails  to  pay  it. 

B  transfers  ownership,  but  relieves  Sones  from  any  responsibility  if  the  paper  is  not 
paid  when  due. 

C  transfers  the  ownership  to  any  party  who  may  hold  the  paper,  making  it  in  effect  pay- 
able to  the  bearer. 

D  transfers  the  ownership  as  in  Form  C,  except  that  it  relieves  Sones  from  further 
responsibility. 

E  is  a  receipt  for  money  paid  to  apply  on  the  promise  indorsed.  Such  indorsements 
need  no  signature. 

F  does  not  transfer  the  ownership  of  the  paper  to  the  bank,  but  merely  gives  authority 
to  the  bank  to  collect  the  paper  as  Sones's  agent. 

G  renders'  Sones  liable  as  surety  without  a  formal  notice  of  protest,  as  the  law  usually 
requires. 

The  student  will  follow  Form  C  in  indorsing  drafts  and  checks  for  deposit,  and  Form  E 
in  indorsing  a  partial  payment  on  a  note. 

CERTIFIED  CHECK 

This  is  an  ordinary  bank  check  that  has  its  validity  acknowledged  by  the  Teller's  writ- 
ing or  stamping  the  word  "certified"  with  date  and  signature  across  its  face.  This  is  usually 
done  in  red  ink  as  in  accepting  a  draft.  Certification  of  a  check  by  a  bank  is  equivalent  to 
an  acceptance,  and  the  certification  is  at  once  charged  to  the  depositor's  account.  Like  a  cer- 
tificate of  deposit,  a  certified  check  may  be  transferred  by  indorsement,  also,  the  indebtedness 
evidenced  by  it  is  not  subject  to  withdrawal  until  the  certified  check  is  returned. 


38 


ADVANCED  ACCOUNTING 


Certified  checks  are  a  convenience  to  the  holder,  who,  upon  identification,  may  deposit 
them  at  any  bank  and  draw  against  them,  as  in  the  case  of  any  other  deposit.  They  are  also 
used  in  the  transmission  of  money,  and  may  be  used,  generally  like  bank  drafts,  in  making 
cash  payments  in  cases  where  an  ordinary  personal  check  would  not  be  available. 


A  CERTIFIED   CHECK 


^_^ 


J#       Gfys/d 


BANK  DRAFTS 

Bank  drafts  are  drawn  by  one  bank  upon  another,  and  are  used  chiefly  for  the  trans- 
mission of  money.  Unless  for  very  large  amounts,  they  are  drawn  "at  sight"  and,  in  com- 
mercial transactions,  are  considered  as  cash.  They  are  usually  drawn  on  banks  in  the  large 
cities  and  are  spoken  of  as  "New  York  Drafts,"  "Chicago  Drafts,"  etc.  The  following  is  an 
ordinary  form: 

A  BANK  DRAFT 


(J^?  *y  ,44^^^^^^^  ^ssTf-  /s,  0 — |tei 


To  FIRST  NATIONAL  BANK 
NEW  YORK. 


If  Guthrie,  Manning  &  Wright  purchase  above  draft  to  send  to  Hallett  &  Preston,  they 
would  indorse  the  draft,  "Pay  to  the  order  of  Hallett  &  Preston,"  followed  by'the  firm  name. 

In  purchasing  a  draft  for  remittance  to  another  firm,  it  is  best  to  have  the  draft  payable 
to  your  own  firm,  after  which  it  can  be  indorsed  payable  to  the  firm  to  whom  you  send  it. 
Many  firms,  however,  prefer  to  have  the  bank  drafts  made  payable  directly  to  the  persons  to 
whom  they  are  sent,  thereby  saving  the  time  required  for  indorsing. 

Banks  in  all  cities  and  towns,  except  a  few  commercial  centers  like  New  York  City  and 
Chicago,  will  have  deposits  with  banks  in  these  centers  and  will  keep  balances  to  their  credit 
by  remitting  drafts  for  collection  and  credit,  and  currency  or  coin  by  express  if  necessary  to 
keep  up  their  balances,  thereby  enabling  them  to  sell  drafts  to  parties  who  may  wish  to  remit 
to  other  cities.  It  is  customary  to  charge  a  small  amount  per  hundred  dollars,  called  ex- 
change, in  addition  to  the  face  amount  of  the  drafts,  to  cover  the  cost  of  issuing  the  drafts 
and  maintaining  the  account. 


BUSINESS  FORMS 


39 


REQUEST   FOR  BANK  DRAFT 


Wanted   by  The  Student 


College  City,  May  16,     19 

_  When  a  draft  is 

wanted  at  bank,  a 

Drafts  on »mYwk request  should  be 

presented  .  to  the 
teller,  giving  all 
information  that 
the  latter  m  a  y 
need  in  filling  out 
the  draft  as  de- 
sired. If  any  ex- 
change is  charged, 
the  amount  of  the 
exchange  is  added 
as  shown  in  the 
form. 


TO  THE  ORDER  OF 

AMOUNTS 

The  Anchor  Mills 

125 

75 

Exchange, 

' ' 

10 

Total, 

125 

85 

CERTIFICATE  OF  DEPOSIT 

It  is  sometimes  desirable  to  place  a  sum  of  money  in  bank,  which  the  owner  does  not 
wish  to  draw  out  through  his  personal  checks.  In  this  case  the  banker  gives  the  depositor 
a  certificate  of  deposit,  (see  accompanying  form)  which  is  an  acknowledgement  by  the  bank 
that  it  has  received  the  money,  and  that  it  is  held  subject  to  the  depositor's  order  upon  sur- 
render of  the  certificate. 

A  certificate  of  deposit  may  be  transferred  by  indorsement,  as  in  the  case  of  a  note  or 
check.  If  it  is  desired  to  withdraw  the  money  covered  by  a  certificate  of  deposit,  or  to  con- 
vert it  into  an  ordinary  deposit,  subject  to  check,  the  certificate  is  surrendered. 

A  CERTIFICATE   OF  DEPOSIT 


(Se»  Apt^wa.  /%W  Jl^/f    I   $J?s* 


(/^vz^^?^^^^<9^f/5>2^^i^^/  \2kttittC4tC    At^ei-^yendtrnteto 


oo 


%«i&«tt 


<&»&<! 


40 


ADVANCED  ACCOUNTING 


DISCOUNT  TICKET 

College  City,  May  )5y 

80X88  AND  DRAFTS  LEFT  FOR  DISCOUNT 


19 


By. 


The  Student 


Note  or  Draft 

MAKER  OR  DRAWEE 

Face 

Int.  to 

Maturity 

AMOUNT 

Note 

J.  B.  Turner 

34 

63 

1 

11 

34 

74 

Draft 

C.  A.  Clemens 

50 

I 

50 

1               | 

1              ' 

Total,                   - 

84 

74 

Discount,        = 

55 

Proceeds,            = 

84 

19 

i 

When  the 
business  man 
takes  notes  or 
drafts  to  the 
bank  for  dis- 
count, he  de- 
livers with  them 
a  ticket,  listing 
the  several  pa- 
pers, including 
accrued  in- 
terest, if  any, 
giving  the  total, 
the  discount, 
and  the  pro- 
ceeds. If  the 
latter  is  correct, 
the  teller  of  the 
bank  will  give 
credit  for  same 
as  a  deposit. 


DRAFTS  AND  ACCEPTANCES 

A  commercial  or  individual  draft  is  a  formal  order  for  the  payment  of  money,  and 
drawn  by  a  business  firm  on  some  other  firm  that  is  indebted  to  the  drawer  on  account.  A 
draft  may  be  drawn  payable  "on  demand,"  or  "at  sight,"  that  is,  upon  presentation ;  or,  in 
case  the  account  is  not  due  at  the  time  the  draft  is  drawn,  at  a  specified  number  of  days 
"after  sight.''     The  former  are  called  sight  drafts  and  the  latter  time  drafts. 

The  parties  to  a  draft  are  designated  in  the  same  manner  as  are  the  parties  to  a  check. 
AN  INDIVIDUAL  DEMAND  DRAFT 


Wi?       6ks>& 


-~*^L*~i*~^J^/5?y. ^J^< 


Drafts  are  used  to  adjust  accounts  without  the  transmission  of  money.  If  Fremont 
owes  the  Student  $75,  and  Stone  owes  Fremont,  the  latter  firm  can  draw  on  Stone  payable 
to  the  Student,  and  the  payment  of  this  draft  will  adjust  the  several  accounts.  When  the 
draft  is  made  payable  at  sight  or  on  demand,  the  drawee  is  expected  to  pay  the  draft  when 
first  presented. 


BUSINESS  FORMS 


41 


AN  INDIVIDUAL  TIME  DRAFT 


The  above  draft  is  drawn  at  thirty  days  sight,  meaning  thirty  days  after  sight,  and  it 
should  be  presented  to  Preston  as  soon  as  possible  for  acceptance.  To  accept  this  draft, 
Preston  should  write  across  the  face  of  the  draft  (red  ink  being  preferred)  the  word 
"Accepted,"  the  current  date,  and  his  signature,  using  two  lines.  The  draft,  after  Preston 
has  accepted  it,  is  called  an  acceptance. 


AN  ACCEPTED  DRAFT 


Commercial  drafts  are  more  commonly  used  as  a  means  of  making  collections  from  dis- 
tant firms  through  the  agency  of  a  bank.  In  this  case  the  drawer  makes  out  the  draft  pay- 
able to  the  order  of  "Myself,"  or  "Ourselves,"  and  endorses  the  draft  in  favor  of  the  bank 
"for  collection,"  or  he  makes  the  draft  payable  directly  to  the  collecting  bank,  who  forwards 
it  for  payment  or  acceptance. 

Goods  are  often  paid  for  with  the  buyers'  acceptance  at  the  time  of  purchase,  the  accept- 
ance in  such  case  being  used  in  place  of  a  promissory  note. 

Dishonor  and  Protest.  If,  upon  the  presentation  of  a  draft,  the  drawee  declines 
either  to  pay  it  or  accept  it,  the  draft  is  said  to  be  "dishonored."  In  the  case  of  a  refusal  to 
pay  an  acceptance  it  should  at  once  be  protested,  as  in  the  case  of  a  refusal  to  pay  a  promis- 
sory note.     (See  page  12.) 


42  ADVANCED  ACCOUNTING 


Theory  of  a  Draft.  When  drafts  are  used  in  business,  the  presumption  is  that  the 
drawee  owes  the  drawer,  and  that  the  latter  owes  the  payee,  but  drafts  are  frequently  em- 
ployed when  these  conditions  do  not  hold,  especially  in  the  case  of  drafts  delivered  to  a 
bank  for  collection.  In  this  case  the  drawer  does  not  owe  the  bank,  the  latter  merely  acts 
as  his  agent  in  making  the  collection. 

The  principles  of  debit  and  credit  apply  to  drafts  in  the  same  way  as  to  orders.  For 
both  drafts  and  acceptances,  they  may  be  summarized  as  follows : 

1.  Credit  persons  when  you  draw  on  them  and  dispose  of  the  drafts,  or  they  accept 
the  drafts. 

Note. — In  the  case  of  drafts  drawn  for  collection  do  not  make  the  credit  until  the  draft  is  accepted  or  paid. 

2.  Debit  persons  when  you  pay  or  accept  their  drafts  on  you. 

3.  The  acceptances  of  others  are  Bills  Receivable  to  you,  while  your  own  acceptances 
are,  on  your  books,  Bills  Payable. 

EXERCISES  IN   COMMERCIAL  DRAFTS 

After  carefully  considering  the  foregoing  principles,  take  a  blank  sheet  of  paper  and  give  in  the  form  of 
Journal  entries  the  debits  and  credits  required  for  the  following  suppositional  transactions : 

1.  Bought  50  barrels  of  Sugar  @  $11,  and  gave  in  payment  my  sight  draft  on  Cook  &  Allen. 

2.  Paid  cash  for  Roberts  &  Co.'s  draft  on  me  for  $75.80. 

3.  Accepted  C.  H.  Parker's  draft  on  me  at  30  days'  sight  for  $150. 

4.  S.  Jones  &  Son  accept  my  draft  on  them  at  30  days'  sight  for  $250. 

5.  Gave  Wilson  &  Brown  on  account  my  draft  on  Davis  Bros,  for  $75. 

6.  Discounted  at  the  Citizens  Bank,  Jones  &  Son's  acceptance,  for  $250,  less  6  per  cent  of  face,  receiv- 
ing the  proceeds  in  cash. 

7.  Henry  Bell  &  Co.  pay  me  on  account  their  draft  on  Miller  &  Parks  for  $100,  which  draft  the  latter 
firm  accepts. 

8.  Paid  cash  for  my  acceptance  favor  C.  H.  Parker,  $150. 

9.  Miller  and  Swift  pay  me  cash  for  their  acceptance  of  Jan.  6,  $87.50. 

10.  The  First  National  Bank  remits  cash  for  my  draft  on  Mansfield,  Carter  &  Co.  for  $400,  less  2  per 
cent  for  collection. 

11.  Sold  20  brl.  Flour  @  $4.00  to  Snyder  &  Locke,  receiving  in  payment  Hill  &  Morlin's  acceptance  in 
their  favor  for  $50.     Balance  on  account. 

12.  Sold  to  A.  H.  Harper  &  Sons  2560  lb.  Butter  (2>  10c,  taking  in  payment  my  acceptance  favor  of 
Cooper  Bros,  for  $140  and  their  draft  at  30  days  on  Day  &  Co.  for  the  balance,  accepted  by  the  latter  firm. 

PROPRIETOR'S  PRIVATE  ACCOUNT 

When  the  proprietor  or  partner  in  a  business  withdraws  goods  or  small  sums  of  money 
for  personal  use,  it  is  usual  to  charge  such  amounts  to  a  private,  or  personal  account,  kept 
with  the  person  making  such  withdrawals.  It  is  assumed  that  these  withdrawals  are  from 
the  profits,  rather  than  from  the  investment  in  the  business,  and  it  would  therefore  not  be 
proper  to  charge  them  to  the  proprietor's  investment  account,  unless  they  are  for  amounts 
obviously  exceeding  the  proportion  of  profits  accruing  to  the  person  making  the  withdraw- 
als. The  private  account  is  to  be  credited  with  any  sums  due  for  salary,  also  for  any  ordi- 
nary expenditures  made  in  behalf  of  a  business  by  a  partner  who  uses  private  funds  for  this 
purpose. 

Upon  closing  up  a  business,  the  profits  may  be  closed  into  the  proprietor's  or  partner's 
private  account,  and  withdrawn  at  his  convenience,  or  they  may  be  closed  into  the  regular 
investment  account,  thus  going  to  increase  the  capitalization  of  the  business.  The  latter 
course  is  usually  followed. 

LEASE 

A  lease  is  a  written  agreement  between  two  parties  for  the  renting  of  property.  The 
owner  of  the  property  is  called  the  landlord,  and  he  agrees  to  give  possession  and  use  of  the 
property  described  for  a  length  of  time  named  in  the  lease.  The  person  renting  the  property 
is  called  the  tenant,  and  he  agrees  to  pay  the  landlord  the  amount  named  in  the  lease  for  the 
use  of  the  property  during  the  time  named.  The  lease  is  signed  by  both  landlord  and  tenant, 
because  each  one  makes  an  agreement ;  and  two  copies  of  the  lease  should  be  made,  so  that 
each  party  may  hold  one. 


BUSINESS  FORMS  43 


Standard  Form  of  Lease 

This  Agreement,  Made  between  A-  R-  Andrews 

of  College  City 


of  the  County  of               Johnson 

and  State  of              Indiana 
The  Student 

of  the  first   part,   and 

of                            College  City, 

Johnson  Co.,           Indiana, 

of  the  second  part,  witnesseth.     That  the  said  party  of  the  first  part  has  this  day  leased  unto  the 
party  of  the  second  part  the  following  described  premises,  to- wit: 

Room  No.  5,  in  the  second  floor  of  Building  Nos.  129—133  Second  Street,  College  City,  Indiana, 

for  the  term  of Three  months from  and  after  the Tenth day  of 


September A.  D.,   19  — ,  at  the monthly rer,t    of 

Ten  Dollars to  be  paid  as  follows,  to-wit: 

on  the  date  of  this  lease  and  on  each  month  thereafter  in  advance 

And  it  is  further  agreed  that  if  any  rent  shall  be  due  and  unpaid,  demand  therefor  being  waived,  or  if 
default  be  made  in  any  of  the  covenants  herein  contained,  it  shall  then  be  lawful  for  said  party  of  the 
first  part  to  re-enter  the  said  premises  and  remove  all  persons  and  property  therefrom,  or  he  may 
recover  possession  thereof,  by  action  for  the  forcible  detention  of  said  property. 

And  the  said  party  of  the  second  part  agrees  to  hire  said  premises,  and  to  pay  the  party  of  the 
first  part  therefor  the monthly rent  of Ten  Dollars 


to  be  paid  as  follows,  to-wit: on  tne  date  of  this  lease  and  on  each  month  thereafter  in  advance 

except  when  said  premises  are  untenable  by  reason  of  fire  from  any  other  cause  than  the  carelessness 

of  the  party  of  the  second  part,  or  of  persons  of         n^s family  or  in         n^s employ,  or  by 

superior  force  or  inevitable  necessity. 

And  the  said  party  of  the  second  part  covenants  that        ne  will  use  said  premises  as  a" 

office    and  for  no  other  purpose  whatever;  and  that      ne       especially  wi1l  not   use  said  premises 

nor  permit  the  same  to  be  used  for  any  unlawful  business  or  purpose  whatever;  that     he        wni  not 

assign  this  lease  or  let  or  underlet  said  premises  without  the  written  consent  of  the  lessor,  under  the 

penalty  of  the  forfeiture  of  all      *"s      rights  under  the  lease:  and  that      ^e       will  use  due  care  and 

diligence  in  guarding  said  property  from  damage;  that  ^e  will  keep  the  same  in  such  repair  as 
the  same  now  are,  or  may  at  any  time  be  placed  in  by  the  lessor,  damages  by  superior  force,  inevit- 
able necessity,  or  fire  from  any  other  cause  than  that  from  the  carelessness  of  the  lessee,  or  persons 

of     ft's       family  or  in     his        employ,  excepted;  and  that  at  the  expiration  of  this  lease,  or  upon  a 

breach  by  said  lessee  of  any  of  the  covenants  herein  contained  ne  will,  without  further  notice  of 
any  kind,  quit  and  surrender  the  possession  of  said  premises  in  as  good  condition  as  reasonable  use. 
natural  wear  and  decay  thereof  will  permit,  damages  by  fire  as  aforesaid,  superior  force,  or  inevitable 
necessity,  only  except*,  d 

IN    WITNESS    WHEREOF,    the    said    parties    have    hereunto    subscribed    their   names    on    this 

Tenth         dav  nf  September  A.  D.,  19— 

A.  R.Andrews        

per  John  Simmons.  Agent. 


The  Student 


44 


ADVANCED  ACCOUNTING 


SHIPPING  ORDER  AND  BILL  OF  LADING 

When  a  consignor  delivers  merchandise  to  a  transportation  company  for  shipment,  he 
usually  brings  a  shipping  book,  or  a  set  of  loose  sheets,  describing  the  shipment  in  triplicate. 
The  printed  matter  is  different  on  each  of  the  three  sheets,  but  the  blank  spaces  to  be  filled  in 
by  the  shipper  are  the  same  in  each  form,  so  that  the  set  may  be  completed  in  one  writing  by 
using  carbon  sheets. 

The  interstate  commerce  commission  has  prescribed  a  form  to  be  used  by  all  common 
carries,  called  a  non-negotiable,  straight  bill  of  lading.  The  original  copy  is  a  shipping  or- 
der that  is  kept  by  the  transportation  company.  The  two  duplicates  are  signed  by  the  agent 
of  the  transportation  company,  the  first  being  a  bill  of  lading  which  is  sent  to  the  consignee, 
and  the  second  being  a  memorandum  of  the  shipment  which  is  kept  by  the  shipper. 

The  form  below  represents  a  set  of  shipping  bills  filled  out  by  Cyrus  Martin,  the  sig- 
nature of  the  transportation  agent,  A.  H.  Hooper,  being  written  on  the  bill  of  lading  and 
memorandum. 

THE  TRIPLICATE  SHIPPER'S  RECEIPT  BOOK 


with  tbt  •UixWd  form  of  Straight  Bill  of  Lading  .pprored  or  thr  IsSentste  Comaini  Coaauaioo  by  Order  No  787  ol  Jaae  27.  1909 

RAILROAD  COMPANY. 


THIS  MEMORANDUM 


wledgment   Ih.l  a  bill  of  lading  boo  beeo  Iftssi 
-       ol  Lading,  oor  o   copy  or    duplicate.    < 
oodod  oololo  (or  filing  < 


Shipper**  No.  £— 
Agent's  No.- 


riffs  in  effect  on  date  of  the  r 


r  of  the  property  described  i 


delivery 


"~^^W^t^^^a^iL^^L^  \^-*tA-aJ  £2-zt^?*s  /y 


the  Original 

19- — ., 


i  noted  (contents  and  condition  < 
y  agrees  to  carry  to  its  usual  place  < 
iid  destination.  It  is  mutually  agreed,  as  I 
laid  route  to  destination,  and  as  to  each  party  at  any  time  interested  i 
nder  shall  be  subject  to  all  the  conditions,  whether  printed  or  writtei 
:  agreed  to  by  the  shipper  and  accepted  for  himself  and  his  assigns 


For  -r  w  rrfiiriiia  with  the  ataadard  for*  el  Strati  Bill  of  U6na  approved  by  the  latenute  Conaace  Cmm^ion  by  Order  No.  787  of  Jhk  27.  1906 

^-^^^C^t^L^J-^^^^  RAILROAD  COMPANY. 
THIS  SHIPPING  ORDER  ■ 


i  Indelible  Pencil,  or  in  Carbon, 


Shipper**  No.  X— 


Agent'*  No. 


RECEIVE,  subject  to  the  classifications  and  tariffs  i 


i  ~~tZtysti^./?lf&*4*£tWLSX)i*  property  described  below,   in  i 


of  this  Shipping  Order. 


~J. 


= 

ir  smcui 
r* 

ir  SimcUI 

-~" 

of  packages  unknown),  marked,  consigned 
delivery  at  said  destination,  if  on  its  road,  otherwise 
each  carrier  of  all  or  any  of  said  property  over  all  or 

all  or  any  of  said  property,  that  every  service  to  be  performed   hereunder  shi 
herein  contained  (includh 


nd  destined  i 
I  deliver  to  a 

i  back  hereof)  and  i 


The  Rate  of  Freight  from.  'dL£r1?£-*L!dL-^&^. 
to  ^&A*t^tZ*zz--f^y )J£&'r 


*f 


.■^5?!^iC^dk±k^^^^Cat=^ 


■DESCRIPTION  OF  ARTICLES  i 


^^^.:  ^^^."t^r^?^^ 


Umform  Bill  of  Lading— Sland«.d    form  of  Siraiahl  Bill  of  Lsd.Bf  approved  by  tke  Ini 


STRAIGHT  BILL  OF  LADING- ORIGINAL- NOT  NEGOTIABLE. 


Coo™.,  by  Odor  No.  767  ol  Joor  27.  1906. 

RAILROAD  COMPANY. 

Shipper's  No.^_ 

Agent's  No 


RECEIVED,  subject  to  the  < 


s  Original  Bill  of  Ladit 


ty&£4*d  *?<L££sC&<*A< .. . -,ne  property  described  bekiio,    in  apparent  'good  order,  except 


Aj6~e*~C£  b^g«^^  Q»>sag/ 


■Z—19- 


itually  agreed,  as  t 


all  or  any  of  said  property. 

herein  contained  (including  conditions  on  back  hereof)  ami  which  i 


The  Rate  of  Freight  from 


*"nr ^fx  -^JM^m^Fi  jjrf^.1  ^*K-  *$***  f*^ 


..is  in  Cents  per  100  lbs. 


ir  •mcui        ir  Smcw 


Jfy 


S?Z*zJ%#ni$n\V 


rssOau    I    IT  B.k.« 


^~ 


rstacuM    irm 


Consigned  to 

Destination,  ..„^T«^a*5rir!fel*>aseft 


Route odL^,  6£y, 


>***•■ 


State  ol  ... 
Car  Initial  . 


.  County  of 
.....  -  Car  No 


/MJ!JL3L 


(/^. 


^VZ^tA**^  /%Z>4j!*<?%/  Shipper 


*? 


If  charges  are  to  be  pre- 
paid, write  or  stamp  here, 
"To  be  Prepaid." 


ed  % .. 

to  apply  ln  prepayment  of 
the  charges  on  the  proper- 
ty described  hereon. 


Charges  Advanced: 


££^rf£ttytL<^.. 


■  Afsnt. 


BUSINESS  FORMS 


45 


RECEIVING  SHIPMENTS 

Upon  the  arrival  of  the  goods  from  another  station,  the  receiving  freight  clerk  prepares 
an  expense  bill  and  consignee's  receipt,  as  shown  by  the  accompanying  forms. 

These  set  forth  all  freight  or  other  expense  charges  of  the  railroad  company,  with  a 
list  of  the  parcels,  weights,  etc. 

The  consignee  signs  the  consignee's  receipt,  which  is  retained  by  the  railroad  office, 
while  the  expense  bill,  if  paid,  is  receipted  by  the  freight  agent  and  delivered  to  the  consignee. 


(Expense  Bill— for  Freight  Received.) 


Consignee- 


^y7.  ^A/ .   ^/^e^>^-J-a--^ 


-AcA-uj^Lu.  3/Iu^JIj.  GLl, 


2&c~m  " 


To  THE  COMMERCIAL  RAILWAY  COMPANY.  Dr. 


For  Transportation  of  Merchandise  as  specified  below: 


Consignor  Ztfe^fel?)  ityall*^*  -$d 
From              ~s0JL^^<j^> 

DESCRIPTION  OF  MERCHANDISE 

WEIGHT 

RATE 

AMOUNT 

#*  JjU;    fj.   £JLj>J 

No.ofW.B.         ^./Y4 

^¥       ..          Jtr-r  PJs^lj 

. 

Date  of  W.  B.             ?/ /  4^//<^tri> 

3-0          .,            Cty  ^J-Lh^z-*^ 

y \5~~o~0 

\jro 

yy^. 

T^ 

Initials  of  Car    .          or.    Jfo. 

No.orCar                \3  <S~ 4,  /f 

Received  payment  for  the  Company, 


U.    <P-    .^^U^-S-fi-^^j  _ 


-Agent. 


Consignee- 


(Consignee's  Receipt  for  Freight.) 


dicZv^J  <r!£<3-*>-4J.   fty^cJu . 


.-<P  ■     ^s/     ^L^i-^i^i-^ 


Received  in  Good  Order  from 

THE  COMMERCIAL  RAILWAY  COMPANY 

The  Merchandise  specified  below: 


/Si- 


lt 


Consignor    C>fLdl?ts»   ^^AL^jS, 

DESCRIPTION  OF  MERCHANDISE 

WEIGHT 

RATE 

AMOUNT 

From                      C—A—<^e-tt—. «-o 

^  *JJ^  cH.i£A~t^ 

No.  of  W.  B.                 Q-  7  *f  fc> 

&*           ..             JfAJ.    <f/*^cAS 

Date  of  W.  B.               y//^//<^*-« 

3-d           >.            €fy  ^^-ttCt^i^f^t , 

//vf~~\S~0 

U~d 

*4- 

JBC 

Initials  of  Car                cJ/.  Jp . 

No.  of  Car                     \3  tT"£  /  f 

Consignee 


The  two  papers  above  are  usually  so  arranged  that  the  written  portion  of  the  con- 
signee's receipt,  except  the  signature,  is  a  carbon  duplicate  of  the  expense  bill. 

Another  plan  followed  by  express  companies  and  some  railway  companies,  is  to  have  a 
Freight  Received  Register  with  columns  for  recording  all  information  pertaining  to  the  ship- 
ment in  a  single  line ;  a  column  also  being  provided  for  the  consignee's  signature.  In  such 
case  an  expense  bill  would  also  be  required. 


46 


ADVANCED  ACCOUNTING 


INVOICES  OR  BILLS 

When  goods  are  sold,  it  is  usual  for  the  seller  to  give  the  buyer  a  complete  list  of  the 
goods,  with  prices,  discounts,  amounts,  etc.  Such  a  list,  made  out  in  due  form,  is  called  by 
the  buyer  an  invoice,  and  by  the  seller  a  bill. 

Note. — In  business,  the  terms  bill  and  invoice  are  to  a  considerable  extent,  used  interchangeably.  As 
a  rule,  however,  the  buyer  refers  to  the  list  of  goods  included  in  the  given  purchase  as  an  invoice,  while  the 
seller  usually  speaks  of  the  same  list  as  a  bill.  The  term,  bill,  is  also  used  broadly  to  mean  any  written  state- 
ment of  indebtedness  that  is  presented  by  the  creditor  to  the  debtor. 

When  the  goods  have  been  paid  for,  the  seller  should  certify  the  fact  on  the  face  of 
the  bill.  This  may  be  done  either  by  stamping  the  word  "Paid"  on  the  bill,  or  by  writing 
the  words  "Received  Payment''  at  the  bottom,  over  the  seller's  signature. 

The  following  form  illustrates  a  receipted  invoice,  or  bill. 

AN  INVOICE  VERIFIED  AND  "O.  K.'D" 


RICHARD  WALSH.Pp.cs. 


JNO.  P.  BOVLE.V.  Puts. 


FRED.  J.  LANGE.Trcas. 


JAMES  M.BURNS.  StCY. 


5-7-9-1 1-13  State  St. 


-4M£. 


Terms:-  ^^L^^jy 


VJyfc*-^^-^ 


*/ 


.?^v  ^ 


-^ 


z 


(L^Z.*£^-*/    (C»^^r  />VL^L-,^/^/     ^2 ^£*&r^ 6~ \iL_ 


»&2A 


/cr-^—j^r-^i  y -t^y^^m^r-^?  S 


r^yT. 


:     ,  y^J  ,<!<*/    A 


/.  /V% 


&L 


'^^c*~e~2-*^^^f>>*?>7  ji^isr 


C^fy 


&C£ 


WHAT  TO  DO  WHEN  AN  INVOICE  OF  MERCHANDISE  IS  RECEIVED 

1.  Verify  the  invoice,  by  comparing  the  several  items  with  the  accompanying  merchan- 
dise, "checking  off"  the  items  of  the  invoice  as  they  are  found  to  be  correct,  using  the  check 
mark  (  V  )  before  each  item,  as  shown  on  the  above  invoice. 

2.  Verify  and  check  the  extensions.  (Extensions  are  amounts  entered  in  the  first 
money  column  of  the  invoice  opposite  each  item.  They  are  found  by  multiplying  together 
the  price  and  the  number  of  articles  mentioned  in  each  item.) 

3.  Verify  and  check  the  total,  adding  the  several  extensions,  and  if  any  discounts  are 
allowed,  see  that  they  are  correctly  computed. 

4.  If  the  invoice  is  found  to  be  correct  in  every  particular,  write  or  stamp  the  letters 
"O.  K."  or  the  words  "Correct"  or  "Verified,"  upon  it  in  some  conspicuous  place. 

Special  Notice.  Whenever,  in  the  course  of  your  work,  an  invoice  of  merchandise  is 
received,  carry  out  the  foregoing  directions  in  the  order  given,  and  with  the  greatest  care, 
until  the  matter  of  the  proper  disposal  of  your  merchandise  purchases  becomes  a  fixed  habit. 


BUSINESS  FORMS 


47 


TRADE  DISCOUNTS 

Trade  or  commercial  discounts,  are  deductions  from  prices,  or  from  the  face  of  the  bill, 
allowed  by  the  seller  to  the  buyer.  These  discounts  may  be  allowed  as  means  of  adjusting 
catalog  prices  to  the  variations  of  the  market,  or  to  encourage  prompt  payment,  or  to  induce 
the  purchase  of  goods  in  large  quantities. 

Discounts  when  applied  to  the  whole  bill,  are  specified  in  the  terms  of  sale  on  the  face  of 
the  bill,  (see  "Terms  of  Sale,")  or  there  may  be  special  discounts  allowed  on  different  items. 
The  accompanying  form  of  bill  shows  the  manner  of  entering  the  discounts  and  terms  of 
sale,  where  special  discounts  are  allowed,  and  where  a  general  discount  of  5  per  cent  is 
given,  provided  the  bill  is  paid  within  30  days. 


Co/umluo,    0Lo, _^JA 


19 


MASON,  CLARKE  &  CO., 


Q)o/l> 


Q)o/J  to. 


A.  C.  Preston, 


Terms:    5/30 


10 

8 

40 


Doz.  Ginger  Ale, 
14      Root  Beer, 
Gal.  Cider  Vinegar, 


$1.00    Less  10  per  cent. 
.90       "       5        " 
.12       "       8 

Less  5  pei  cent 


Received  Payment, 

Mason,  Clarke  &  Co. 


9 

6 

84 

4 

42 

20 

26 

1 

01 

19 

25 


Terms  of  Sale.  The  terms  upon  which  the  goods  are  sold  should  always  be  stated  in 
the  bill.  "Terms  Cash"  implies  that  the  bill  is  to  be  paid  in  from  10  to  30  days,  according 
to  custom.  In  most  parts  of  the  country  cash  terms  are  allowed  if  the  bill  is  paid  within  30 
days.  "Spot  Cash"  means  that  the  goods  are  to  be  paid  for  on  delivery.  "5/30"  implies 
that  if  the  goods  are  paid  for  within  30  days,  a  discount  of  5  per  cent  will  be  allowed.  "Cash 
10  and  2  per  cent  off"  implies  that  a  discount  of  10  per  cent  is  given  on  the  face  of  the  bill, 
and  an  additional  discount  of  2  per  cent  on  the  proceeds  if  cash  is  paid. 

Sometimes  three  or  more  successive  discounts  are  allowed  as  "10,  5  and  2  off,''  these 
are  known  as  "Series  Discounts." 

The  terms  of  Sale  should  be  given  in  the  Sales  Book  or  Purchase  Book  entry,  and  also 
entered  in  the  explanation  column  of  the  Ledger,  at  the  time  the  amount  of  the  sale  is  posted. 

Note. — The  entry  of  terms  of  sale  in  the  Ledger  affords  a  ready  means  of  arriving  at  the  exact  status  of 
a  customer's  account,  and  is  a  convenient  guide  in  preparing  statements.  The  practice  is  generally  observed 
by  accountants  in  wholesaling,  and  should  not  be  neglected  in  your  present  business. 


t_yX3amilton    <#•    Qjo 


19   - 


19 


Jan 

4 

•  i 

19 

Feb. 

3 

20 

I 

S.  B. 


30  days 

7 

156 

70 

Feb. 

2 

60    " 

18 

249 

25 

Mar. 

5 

30    '• 

27 

125 

2-10, 

n  60    " 

38 

200 

C.  B 
J. 


26 
47 


156 
125 


70 


DISCREPANCIES  IN  BUSINESS  PAPERS 

It  sometimes  happens,  through  carelessness  of  the  writer,  that  there  is  a  disagreement  in 
the  amounts  given  in  a  check,  note,  or  other  business  paper.  In  such  case  the  amount  as 
written  in  the  body  of  the  paper  is  taken,  and  not  the  figure  amount  in  the  margin. 


48 


ADVANCED  ACCOUNTING 


12  3 

b  1    a 

4  5 
c  k 

6  7  8  9  0 
horse 

12  3 

No 
4  5 

2 

6  7  8  9  0 

now 

b  e 

quick 

COST-MARKING  GOODS 

In  business  it  is  often  desirable  to  mark  various  articles  of  merchandise  with  their  cost, 
and  in  such  a  way  that  only  the  merchant  or  his  salesmen  can  interpret  the  markings.  This 
is  usually  done  "in  cipher,"  that  is,  by.  selecting  a  word  or  phrase,  containing  just  ten  letters, 
all  different,  and  using  these  letters  instead  of  the  ten  figures,  in  making  the  cost  marks.  The 
following  are  illustrations  of  cost-mark  ciphers : 

No.  1 
5     6 

k     h 

No.  2 

t  5    6 

)  e     q 

Explanation. — In  case  of  an  article  that  cost  $3.25,  the  cost  mark  in  cipher  No.  1  would 
be  "alk,"  and  in  cipher  No.  2  would  be  "woe." 

To  avoid  repetition  of  the  same  letters,  "repeaters"  are  often  selected.  Supposing  x,  y, 
and  z  were  to  be  used,  the  amount  $22.22  instead  of  being  marked  from  cipher  No.  1  "1111" 
could  be  "  1  y  z  x." 

MEMORANDUM  OF  CREDIT 

In  case  of  errors  in  billing,  shortages  (that  is,  the  shipment  of  a  smaller  quantity  of 
goods  than  the  invoice  calls  for),  the  shipment  of  damaged  goods,  etc.,  the  matter  is  usually 
adjusted  between  the  parties  through  a  Memorandum  of  Credit,  which  is  a  written  acknowl- 
edgement of  the  error,  sent  by  the  party  at  fault,  to  the  party  in  whose  favor  the  amount  is 
to  be  credited. 

The  person  or  firm  receiving  the  memorandum  of  credit,  debits  the  person  who  sends  it, 
crediting  whatever  account  was  affected  by  the  original  transaction,  which,  in  most  cases,  is 
the  Merchandise  account. 

The  person  sending  the  memorandum  of  credit,  credits  the  person  to  whom  it  is  sent, 
and  debits  the  account  affected. 

The  form  here  given  illustrates  the  usual  method  of  making  out  a  memorandum  of 
credit. 

MEMORANDUM   OF  CREDIT 


Vincennes,  Ind.,. 


Oct.  5, 


19 


From... 


S.  H.  Baker  «S  Co., 
WHOLESALE,  GROCERS 


56  Main  Street. 


To. 


James  H.  Bell 


Elkhart,  Ind. 


Special  discount  on  Invoice  Oct.  3.  190- 
correct  overcharge 


INVOICE  BOOK 


to 


75 


Merchants  frequently  file  their  invoices  in  such  a  way  as  to  make  an  invoice  book  from 
which  postings  can  be  made  to  the  ledger.  To  secure  this  form,  the  invoices  are  filed  in  con- 
secutive order  as  they  are  received,  the  firm  name,  date,  and  terms  being  left  visible,  and  the 
amount  of  each  invoice  being  recorded  on  the  right  margin  opposite  the  firm  name.  The 
lower  part  of  each  invoice  is  pasted  to  the  leaf  of  the  invoice  book,  and  the  upper  is  left 
loose,  so  that  it  can  be  lifted  if  we  wish  to  see  the  items  of  any  invoice  immediately  preced- 
ing.   The  amounts  of  the  invoices  extended  to  the  right  margin  can  be  added  and  forwarded, 


BUSINESS  FORMS 


49 


A  PAGE  OF  THE  INVOICE  BOOK 


&!&&&»«&«* 


R.   L.   Davis  &  Co. , 

Marion,   la 


<%?i»njy  */,.  ft/*. 


Mar.   9,   19., 


salesman        Kucker  Texms    60  d.   2%  10  d 

SHIPPEDVIA     C.     &.     N.     W. 


/V^as,^^-r?y  ^fh^ss-T*^ 


AU  ctat*u  for  lessor  D<ana(t  must  be  nportrd  direct  to  the  Transportation  Co,     Oar  responsibility ceases  hfle/i  MeirJuwttse  is  receipted tor  ui  food  enter. 
Goods  not  satisfactory  should  be  held  and  notice  sou  us  pntiifltfji 


t^rtzteu^      March  18,  19 
R.  L.  Davis  &  Co., 

. .  Marion,  la. 

trr — L2 per  rent  discount  alhiwcd  if  paid  at.  ottr  office  H-U/utl  10  (toys  frtm  date  of  Invoice. 


100  Bx.  Evap.  Ap.  5000  lb.  .05  1/2 

•*  75  Bx.  Cal.  Evap.  Peaches 

3750  lb.  .07 

•'SO  Bx.  Cal.  Prunes 

(choice)  1250  lb. .10  1/2 


50 


ADVANCED  ACCOUNTING 


ILLUSTRATION  OF  INVOICE   FILE 


BUSINESS  FORMS 


51 


the  total,  when  posted,  being  carried  to  the  debit  of  Mdse.,  the  same  as  in  the  Purchase 
Book.  The  form  on  page  49  represents  a  page  of  the  Invoice  Book,  with  the  Ledger  folios 
of  the  several  accounts  as  post  marks. 

INVOICE  FILE 

A  convenient  means  of  filing  invoices,  consists  in  pasting  them  in  a  book  prepared  for 
the  purpose.  The  invoices  are  filed  in  the  order  they  are  received,  those  from  the  same  firm 
being  kept  together.  The  first  invoice  is  filed  by  applying  paste  or  mucilage  to  the  upper 
margin  of  the  back  and  attaching  it  to  the  top  of  the  page.  The  next  is  attached  beneath  the 
first  one,  and  in  such  a  way  that  the  heading  of -No.  2  is  covered  by  No.  1.  (See  the  illustra- 
tion on  page  50. )  Invoices  kept  in  this  way  may  be  kept  indefinitely,  and  are  always  easily 
accessible  when  wanted. 

STATEMENTS  OF  ACCOUNT 

A  statement  is  a  written  announcement  or  exhibit  of  the  state  of  a  debtor's  account  as 
shown  by  the  creditor's  books.  It  is  usually  drawn  from  the  Ledger  and  may  give  the  bal- 
ance due,  or  a  list  of  debits  with  their  dates,  followed  by  a  list  of  credits  with  their  dates, 
and  the  resulting  balance. 

Statements  do  not  repeat  items  already  rendered  in  previous  statements,  but  merely  the 
balance  due  with  any  additional  items  of  debit  or  credit  not  previously  rendered. 

Business  men  usually  send  out  statements  on  or  near  the  first  of  each  month,  to  all  per- 
sons who  owe  them  on  account,  or  at  any  other  time  when  the  account  is  to  be  paid  in  full. 

Statements  may  be  sent  by  mail  or  presented  in  person.  If  paid,  they  should  be  receipted 
the  same  as  bills. 

The  accompanying  models  illustrate  the  form  of  statement  required  under  the  different 
conditions  specified. 


Ml 


fi  *zfJ3~sSAr,V-&, 


Sn  ytee't  with.... 


J^j^JLa>^^:  J2M. 


vA/<  /  ^/J?u 


No.  1-One  Debit. 


myM&rt^. 


^7/&/A  ^tM^^ 


±&L 


<-/Q 


52 


ADVANCED  ACCOUNTING 


No.  2— Several  Debits 


^A. 


&Z/3*SAjif.~.^/ 


sv 


X 


-7* 


££. 


.A5L 


-/- 


s 


&S± 


JZS" 


No.  3-A  Debit  and  a  Credit 


42L4L21 


JL. 


j£r/3,yA  /%>,^s 


-4» 


L£ 


££L 


&* 


J2l 


'JZsr. 


-f- 


Cg2-a£-^L^ 


/^<? 


/7J- 


^ 


^^_ 


i 


No.  4— Several  Debits  and  Several  Credits      (Receipted  ) 


ri^ 


jj- 


&~/3,J>AJZ>,~,^/. 


J.S-0 


AL 


/<Z5 


SO 


.Jjl. 


SO 


,2S_ 


V \2S 


7 


S 


& 


£W. 


/to 

JLS- 


/Vl^s1J>S.    ^^J^.^^,  j,^ 


P^^J.. 


2Zl 


^ 


J2* 


-^L>/.  j(Z£«jrrTn*^s£- 


S^_ 


^g_ 

JS 


BUSINESS  FORMS  53 


BUSINESS  LETTERS 

Hereafter  a  portion  of  your  business  will  be  conducted  through  correspondence. 

Nothing  in  the  every-day  work  of  a  business  man  is  more  important  than  the  proper 
management  of  his  business  correspondence. 

When  business  letters  are  received  they  should  be  answered  promptly  and  the  matters 
to  which  they  relate  attended  to  at  once. 

In  most  business  houses,  all  letters  received  are  carefully  filed  in  receptacles  provided 
for  the  purpose,  and  copies  of  all  letters  sent  out  are  also  kept  on  file. 

We  can  best  describe  the  general  form  and  spacing  of  the  various  parts  of  a  letter  in  the 
diagram  given  below,  which  should  be  followed  by  the  student  in  all  of  his  business  letters. 

In  this  diagram,  line  1  represents  the  address  of  the  writer,  which  should  begin  about 
half  way  across  the  page  from  left  to  right,  and  usually  on  the  first  ruled  line  from  the  top  of 
the  page.  The  address  line  should  contain  the  writer's  address,  town  and  state,  and  also 
the  date  of  the  letter.  If  the  writer's  address  is  a  city,  his  street  and  number  can  be  written 
on  a  line  immediately  above  the  town  and  state. 

Line  2  represents  the  name  of  the  party  addressed,  and  line  3  the  address  of  the  same 
party. 

Line  4  represents  the  title  of  respect,  as,  Sir,  or  Madam ;  Dear  Sir,  or  Dear  Madam ; 
Gentlemen,  or  Sirs.  Usage  varies  as  to  the  point  used  after  the  title  of  respect.  It  may  be 
a  dash  ( — ),  comma  and  dash  (, — ),  colon  and  dash  (  : — ),  or  the  colon  (  :).  The  last 
form  is  most  commonly  used. 


DIAGRAM  OF  A  BUSINESS  LETTER 


54 


ADVANCED  ACCOUNTING 


Line  5  represents  the  beginning  of  the  body  of  the  letter  on  the  next  line  below  the  title 
of  respect. 

Lines  6  and  7  represent  new  paragraphs.  Each  new  topic,  or  general  division  of  an  ex- 
tended topic,  should  be  made  a  distinct  paragraph.  The  first  line,  of  each  paragraph  is  in- 
dented, in  order  that  anyone  desiring  to  refer  to  some  point  in  the  letter  can  do  so  without 
reading  the  entire  letter. 

Line  8  represents  the  complimentary  closing;  as,  Yours  truly,  Yours  respectfully,  Very 
truly  yours.  There  is  a  tendency  in  this  age  of  electricity,  to  great  hurry  and  brevity  in  all 
business  composition,  and  hence  to  drop  all  needless  expressions;  such  as,  the  title  of  respect 
at  the  opening  of  a  letter,  and  the  complimentary  closing  just  preceding  the  writer's  signa- 
ture ;  but  it  would  be  a  great  loss  to  have  the  civilities  and  courtesies  of  life  crowded  out  more 
than  is  absolutely  necessary  to  business  success. 

Line  9  represents  the  writer's  signature.  This  should  be  written  so  plainly  that  it  could 
be  easily  read  by  a  stranger. 

The  accompanying  letter  conforms  to  the  foregoing  diagram  and  illustrates,  also  the 
punctuation  required.     Take  it  as  a  model  in  your  business  correspondence. 


C? '  &r/&J£v-@^ 


&£t*<f~1S  ^C^-z^c^iy    s^l^<?-i^c^-zLS 


'>-7^<&'. 


BUSINESS  FORMS  55 


Folding.  Business  letters  are,  as  a  rule,  written  on  standard  sized  paper  8^x11 
inches,  and  are  inclosed  in  "No.  6"  or  "No.  6y2"  envelopes  (that  is,  envelopes  6  or  6l/2 
inches  in  length).     No.  6  envelopes  are  supplied  with  your  office  equipment. 

To  fold  a  letter  for  insertion  in  an  envelope,  proceed  as  follows : 

1.  Place  the  sheet  before  you  face  upward ;  take  hold  of  the  bottom  margin  and  turn  it 
upward  to  within  one-fourth  of  an  inch  of  the  top  margin,  being  careful  to  have  the  side 
margin  even,  then  fold  by  running  the  finger  nail  firmly  across  the  bottom  of  the  folded  sheet. 

2.  Turn  upward  about  2l/2  inches  of  the  right  hand  margin  of  the  folded  sheet  to  the 
left,  and  fold. 

3.  Bring  the  left  hand  margin  over  to  the  right  within  one-fourth  of  an  inch  of  the 
last  fold,  and  fold  firmly  with  the  finger  nail  as  before. 

Be  careful  to  have  the  margins  in  the  right  position  before  folding,  and  keep  the  sheet 
free  from  creases,  finger  marks,  etc. 

Enclosures.  By  an  "enclosure,"  is  meant  any  paper,  as  a  draft,  receipt,  money  order, 
or  the  like,  which  is  enclosed  in  a  letter.  The  enclosure  should  be  placed  face  upward 
across  the  top  of  the  letter  and  folded  with  it. 

When  one  or  two  stamps  are  enclosed,  they  may  be  pinned  (not  stuck)  to  the  top  of  the 
sheet,  and  circulars,  extra  letters,  etc.,  should  not  be  folded  with  the  letter  as  in  the  case  of 
other  enclosures,  but  inserted  separately. 

Superscription.  The  address  on  an  envelope  should  occupy  three  lines,  the  name  of 
the  person  addressed  being  written  on  the  first  line,  his  town  on  the  second  line,  and  his 
state  on  the  third.  If  he  has  a  postofnce  box  or  street  number,  either  of  these  may  be  given 
on  the  third  line  to  the  left  of  the  state.  If  the  person  addressed  is  a  stranger  in-  the  town 
and  his  letter  is  sent  in  the  care  of  another  person,  the  address  of  the  latter  should  be  written 
on  the  third  line  in  place  of  the  street  and  number. 

The  first  line  of  the  address  should  begin  a  little  below  midway  between  the  top  and  bot- 
tom of  the  envelope,  and  far  enough  to  the  left  to  allow  writing  the  name  plainly. 

If  the  writer  wants  the  letter  returned  in  case  it  is  not  delivered  to  the  person  addressed, 
he  will  write  his  own  name  and  address  in  the  upper  left  corner  of  the  envelope. 

The  diagram  below  represents  an  envelope  addressed  and  stamped  ready  for  mailing. 


r         '   " 

\ 

. 

c 

56 


ADVANCED  ACCOUNTING 


Business  letters  should  be  plain,  brief,  and  courteous.  Great  care  should  be  taken  to 
have  the  letters  correct  in  the  matter  of  spelling,  capitalizing,  and  punctuation.  They  should 
be  neat  and  business-like  as  to  folding  and  addressing. 

The  following  letter  is  merely  suggestive  to  the  student  as  to  the  general  style  and 
phraseology  of  a  business  letter.  The  student  should  conform,  to  the  general  style  of  busi- 
ness letters,  but  he  should  study  to  make  them  express  something  of  his  own  personality. 
In  no  part  of  the  work  should  he  allow  himself  to  become  a  mere  copyist. 

LETTER  WITH   FIRST  ORDER  FOR  MERCHANDISE 

College  City,  Iowa,  Sept.  1,  19 

Dalton  &  White, 

Central  City. 
Gentlemen: -- 

We  have  just  commenced  business  in  this  city,  dealing 
in  general  merchandise,  with  resources  consisting  of  Bills 
Receivable,  Merchandise,  and  Cash,  amounting  to  ($4033.80) 
Four  Thousand  Thirty-three  and  80-100  dollars,  and  no 
liabilities. 

We  enclose  order  for  merchandise  now  required,  and,  no 
doubt,  will  need  other  supplies  as  soon  as  our  business  is 
fairly  opened  up. 

We  would  refer  you  to  the  Exchange  Bank  and  to  J .  C. 
Thomas,  of  this  city,  who  will  advise  you  as  to  our 
responsibility. 

If  our  statement  and  references  are  satisfactory,  kind- 
ly favor  us  with  early  shipment,  billing  on  account  at 
fifteen  days  with  your  best  discount  offer  for  cash  in  five 
days.  Very  truly  yours, 

A.  Learner. 

ORDER  BLANKS 

The  order  blank  illustrated  below  is  used  for  ordering  merchandise  from  firms  in  other 
cities.     Such  orders  should  specify  method  of  shipment  and  terms  of  puic'ase. 


Order  No. L 


ORDER  BLANK 

College  Citv,  Sept.  1, 


19 


M 


Dalton  &  White 


Central  City, 


Kindly  send  at  once,  via 

and  bill  on  the  following  terms:. 


B.  C.  Ry. 


On  acct.  15  days 


The  Student. 


24 
24 

Brls.  Flour 

Cases  Corn  Meal 

36 

Cases  Rolled  Oats 

i 

BUSINESS  FORMS 


57 


LOCAL  ORDER  TICKETS 

The  order  ticket  illustrated  below  is  used  for  ordering  merchandise  from  other  firms  in 
the  same  city.  It  should  specify  the  terms  of  purchase,  but  as  it  is  used  only  in  local  pur- 
chases, no  shipping  instructions  are  required. 

The  student  will  use  his  local  order  pad  in  his  purchases  from  local  firms. 


LOCAL   ORDER  TICKET 

College  City,  Sept.  /, 


19. 


Mr.  C.  M.  Brown 


Please  deliver. 

1  box  Dried  Apricots 


2  boxes  Cal. 

Prunes 

3  boxes  Raisins 

Terms:         c/t* 

to  my  acct. 

The  Student 


Invoice  of  Shipment.     This  is  an  itemized  statement  of  goods  that  are  shipped  to  a 
commission  firm  to  be  sold  on  the  account  and  risk  of  the  owner.    It  should  be  sent  by  mail  - 
to  the  consignee  at  the  time  the  goods  are  shipped. 

Neither  the  price  nor  the  value  of  the  shipment  is  ordinarily  entered  on  the  Invoice  of 
Shipment,  since  the  goods  are  not  sold  to  the  consignee,  but  merely  delivered  to  him  to  be 
sold  for  the  owner.  Sometimes,  however,  the  cost  of  the  gt>ods  may  be  entered  in  order  to 
serve  as  a  guide  to  the  commission  merchant,  who  is  expected  to  effect  their  sale,  if  possible, 
at  a  gain  to  the  owner. 

The  form  below  illustrates  one  of  the  student's  invoice  of  shipment  blanks  properly 
filled  out. 

A  MODEL  INVOICE  OF  SHIPMENT 


\~&* 


m  k-y<?^i. 


^C^r. 


Below  please  find  invoice  of  Merchandise  sent 


U-  r 


Freight  prepaid  %  *7"  " 

risk  of yJc^c-^f-^c-f^c-T^-^^/^y 


^ 


_Car   No   -2-, 3  7^~ 


UNPAID    $_. 


_TO   BE   SOLD  ON   ACCOUNT  AND 


Consignor 


s-^fc^^^^g^ 


5~OQ 


Js-t^s'.  /J>asisrk^. 


5~Oa. 


58  ADVANCED  ACCOUNTING 


AGREEMENT  OF  CO-PARTNERSHIP 


This  Agreement  Witnesseth,  That C.  H.  Benton 


of  Akron,  O.    and  ^-  P-  Monroe 

of      Akron,  0.  and 


of have  this  day  agreed  to  associate  themselves  together 

as  a  co-partnership,  for  the  purpose  of  engaging  in  the  business  of  buying  and  selling  for  profit 

and  on  commission,  dairy  products  and  general  produce. 

at  Akron jn Summit        County,  Ohio, 

under  the  firm  name  and  style  of. C.  H .  Benton  &  Co. _ 


the  term  of  said  co-partnership  to  continue  one  year   ,  from  and  after  the 

fiftn day  of  January,  191      (  unless  sooner  dissolved. 

The  investment  contributed  by  the  aforesaid  partners  is  to  be  as  herein  set  forth  to-wit : 
C.  H.  Benton  contributes  tne  net  resources  of  the  mercantile 

business  heretofore  conducted  by  him. 


A.  P.  Monroe 

contributes 

Seven  Thousand  Dollars  in  Cash 

and  good  securities. 

•% 

contributes 

The  profits  or  losses  of  said  partnership  business  are  to  be  shared  in  the  following  pro- 
portions : 

C.  H.  Benton,  one-half: 


A.  P.  Monroe,  one-half. 


With  respect  to  the  time  and  service  given,  and  the  compensation  to  be  received,  it  is 
agreed  that  C-  H-  Benton  is  to  devote  his  entire  time  to  the  business,  and  is  to  receive  in  addition  to 


his  proportion  of  the  profits,  a  salary  of  ($200)  Two  Hundred  Dollars  per  month. 


It  is  also  agreed  that  aside  from  the  profits  and  compensation  heretofore  mentioned, 
neither  partner  is  to  withdraw  from  the  business  any  money  or  other  property,  except  with 
the  written  consent  of  his  co-partner. 

It  is  especially  agreed  that  neither  of  the  parties  to  this  contract  shall  sign  or  indorse 
any  bond,  note,  draft  or  commercial  paper,  nor  sign  any  official  or  other  bond,  nor  do  any 
other  act  to  create  a  financial  liability  or  obligation,  without  the  written  consent  of  his  co- 
partner. 

At  the  expiration  or  sooner  determination  of  said  co-partnership,  the  business  and 
property  of  said  firm  may  be  closed  out  by  sale;  and  after  all  debts  and  liabilities  are  paid 
and  discharged,  the  amount  remaining  shall  be  divided  between  the  partners  in  the  ratio  of 
their  respective  interests;  or,  if  the  parties  so  agreee,  the  co-partnership  may  be  continued 
for  such  further  time  and  upon  such  terms  as  the  members  thereof  may  be  able  to  agree 
upon. 

Witness  our  hands  this fifth day  of  January  191 

( A.  T.  Simson 

Witnesses  < 


j  G.  H.  Patterson 


c. 

H 

Benton 

A. 

P. 

Monroe 

BUSINESS  FORMS  59 


DAILY  CASH  PROOF 

No  detail  of  accounting  is  more  important  than  the  daily  verifying,  or  "proving,"  of  the 
cash  account.  This  is  effected  simply  by  counting  the  cash  on  hand  and  combining  it  with 
the  cash  in  bank  to  see  if  the  amount  is  the  same  as  the  balance,  or  difference  between  the 
totals  of  the  two  sides  of  the  cash  book.  In  many  business  houses,  however,  a  written  form 
of  cash  proof  is  used,  which  shows  the  work  of  the  proof  in  detail.  The  form  below,  except 
name,  date  and  amount,  shows  the  student's  cash  proof  as  it  would  appear  if  made  out  at 
the  end  of  Section  One  of  the  Business  Practice. 

EXPLANATION  OF  CASH  PROOF 

On  the  line  for  "Previous  Cash,"  we  enter  the  amount  of  the  investment,  $3000. 

In  subsequent  reports,  this  line  will  show  the  cash  balance  as  forwarded  from  the  previ- 
ous report. 

On  the  line  for  "Cash  Received"  we  enter  the  total  of  the  items  in  the  first  column  of 
the  debit  side  of  the  cash  book,  $84.48. 

On  the  line  for  "Cash  Paid,"  the  total  cash  book  credits  is  entered,  $425.89. 

The  "Cash  Balance,"  $2658.59,  is,  of  course,  the  difference  between  the  total  debit  of 
cash  and  the  cash  paid. 

The  next  line  shows  the  amount  on  hand  in  the  cash  drawer.  If  there  has  been  no  error 
either  in  handling  the  money  or  in  keeping  the  cash  book,  this  amount  added  to  the  cash  in 
bank  will  equal  the  cash  book  balance. 

CASH  PROOF. 

Name 

Date : 


Previous    Cash $    3000.00 

Cash   Received '  &         84.48 

Total  Debit  of  Cash $   5084.48 

Cash   Paid •*      425-80 


Cash   Balance $   2658  '  59 


5    45 
Cash  on  hand  per  Cash  Drawer $ _ 


Cash  in  Bank  per  Check  Book ft    £655.14 


Total 


Equal  to  Cash  Balance $    2658.59 


KEEPING  ACCOUNTS  OF  SHIPMENTS 

In  some  works  on  Accounting,  the  student  is  instructed  to  keep  a  separate  ledger  account 
with  each  shipment,  but  this  method  is  now  seldom  used  in  business.  In  other  words,  he  is 
instructed  to  keep  a  general  account  with  "Shipments,''  but  in  this  course  we  prefer. to  have 
the  student  consider  shipments  as  his  merchandise  until  they  are  disposed  of-  Following  this 
plan,  when  goods  are  shipped  for  sale  on  commission,  a  memorandum  of  the  shipment,  with- 
out prices  or  extensions,  is  entered  in  the  sales  book,  as  illustrated  on  page  60. 


60 


ADVANCED  ACCOUNTING 


MEMORANDUM   ENTRY   OF  A  SHIPMENT 


Oct. 


V 


Shipment  to  A.  B.  Hamlin  &  Co. 
500  doz.  Eggs, 

875  lb.  D.  Butter, 

(Acct.  Sales  Received  Oct.  20.) 


(Should  be  written  in  red  ink) 


When  you  receive  an  account  sales,  refer  to  the  original  memorandum  of  the  shipment 
in  your  sales  book  and  enter1  in  red  ink  under  it  "Acc't  Sales  Received,"  with  the  date.  This 
will  enable  you  to  ascertain  readily  what  shipments  have  been  reported  and  what  ones  have 
not. 

When  the  proceeds  of  the  shipment  are  received,  the  amount  is  entered  in  the  sales  book 
as  follows : 

ENTRY  OF  THE  NET  PROCEEDS  OF  A  SHIPMENT 


Oct. 


JO 


V 


V 


A.  B.  Hamlin  &  Co.,  Proceeds  Shipment  Oct." p 

per  Acct.  Sales  of         Oct.  18 
Reed.  Cash 


257 


5° 


Quite  often,  the  amount  of  the  proceeds  is  not  remitted  at  the  time  the  account  sales  is 
rendered,  but  is  left  to  stand  against  the  account  of  the  consignee.  In  this  case,  write  below 
the  entry  the  words  "on  account,"  and  when  the  sales  book  is  posted,  carry  the  amount  to 
the  consignee's  account  in  the  ledger,  as  in  the  case  of  an  ordinary  sale  on  account. 

CONSIGNOR'S  EXPENSE  BILL 

When  the  shipper  prepays  freight  charges  on  a  shipment  of  merchandise,  he  will  receive 
from  the  transportation  company  a  consignor's  expense  bill  or  a  receipt  for  prepaid  freight. 
These  prepaid  freight  receipts  should  be  carefully  filed  as  vouchers. 

FORM  OF  CONSIGNOR'S  EXPENSE  BILL 


Receipt  for  Prepaid  Freight  Charges 

Collected   at  College  City 


The  Student 


consignor.    To  apply  on  prepayment  of  charges  on 
freight  consigned  to 


Central  Produce  Co. 


At 


Consignee 

Central  City 


W.  B.  No.      632        Dated     9/6      19 

Car  Initials  B-  C-  R-  Car  No.     2916 

40  000 


Capacity  of  Car_ 


Pounds 


Consignor  Dr. 

To  BUSINESS  COLLE.GE.  RAILWAY  CO. 


DESCRIPTION    OF   ARTICLES 

WEIGHT 

Rate 

Amount 
Prepaid 

/  Car  Wheat 

27.000 

15 

40 

50 

Total  to  Collect 

40 

50 

Received  payment  J   c   LonS  Agent     SeP*-  6      19 


BUSINESS  FORMS 


61 


COMMISSION  SALES  BOOK 

This  book  differs  from  the  ordinary  sales  book  in  having  three  amount  columns,  the 
first  for  extending  sales  of  consignment  goods,  the  second  for  sales  of  merchandise,  and  the 
third  for  totals.  If  a  bill  is  discounted,  the  items  in  the  bill  are  short-extended  in  the  com- 
mission sales  book  (the  amounts  being  written  next  to  the  first  amount  column)  and  the 
proceeds  after  discount  are  carried  to  the  proper  column. 

In  the  model  form  below,  the  first  entry  represents  an  ordinary  sale.  Each  of  the  other 
sales  includes  some  consignment  goods. 


FORM  OF  COMMISSION  SALES  BOOK 

19- 

o 

fa 

Consts. 

Mdse. 

Total 

Jan. 

2 

4 

62 

V 

IO 

V 

V 

IO 

V 

Amt.  For'd 

R.   W.  Day 

do  bu.  Potatoes                                            .40 
Ace' t  10  days 

N.  S.  Barker 

40  es.  Eggs                               C—i         4.50 
Ree'd  Cash 

L.   IV.  Lane 

20  tubs  Butter,  ppo  lbs.         C — /            .20 
10  es.  Eggs                                                4.50 

Ree'd  Cash 

180 

ip8 

3r9 

24 

45 

20 

24 
l8o 

H3 

5 

V 

L.  Robinson 

- 

IO 

60  es.  Eggs                               C — /          4.60 

276 

IO 

*9 

jo  tubs  Butter,  i,4po  lbs.      C — /            .21 
B.  Rec.  Note  jo  days 

J12 

po 

588 

po 

V 

C.  S.  Peters 

60  lbs.  Dr.  Poultry                                    .12     y.20 

2  tubs  Butter,  p6  lbs.                                 .20  19.20 

26.40 
Less  10  per  cent                                           2.64 

23 

76 

ii 

V 

80  brl.  Apples                          C — 2         1.60 
Ree'd  Cash  $100 

128 

I5I 

76 

T9 

B.  Rec.,  Note  jo  days,  $31.76 
Mdse.  Cr. 

411 

96 

62 


ADVANCED  ACCOUNTING 


CONSIGNMENTS  AND  CONSIGNMENT  ACCOUNTS 

In  the  commission  business  it  is  necessary  to  keep  separate  accounts  with  each  consign- 
ment received.  All  claims  that  we  have  against  a  consignment  for  money  advanced,  expenses 
paid  or  assumed  by  us,  or  charges  made  by  us,  are  entered  on  the  left  page  as  debits.  All 
proceeds  arising  from  the  sale  of  a  consignment  are  entered  on  the  right  page  as  credits,  no 
distinction  being  made  between  cash  sales  and  time  sales,  as  these  do  not  affect  the.  con- 
signor, the  commission  merchant  assuming  all  risks  in  case  of  time  sales. 

When  the  commission  merchant  deals  in  merchandise  of  his  own  in  addition  to  that  re- 
ceived on  consignment,  as  is  usually  the  case,  he  must  keep  the  different  lots  of  consignment 
merchandise  entirely  distinct,  and  must  keep  separate  records  of  the  sales  of  each  lot,  and  of 
the  expense  items  relating  to  each. 

Various  methods  of  accomplishing  this  are  employed  by  bookkeepers,  but  the  plan  pre- 
sented here  has  the  merit  of  simplicity  and  practicality,  and  is  well  adapted  to  the  conditions 
of  an  average  business. 

The  student  is  recommended  to  study  carefully  the  description  of  the  Commission  Sales 
Book,  page  61,  and  Commission  Sales  Ledger  below,  and  to  keep  his  own  books  strictly  in 
accord  with  the  forms  given. 

COMMISSION  SALES 


Consignment  No.   1 


C.  P.  THURMAN 


19— 

Fol. 

Jan. 

2 

Received  per  C.  R.  I.  &  Pac.  R.  R. 
100  cs.  Eggs 
50  tubs  Butter 

CHARGES 

2 

V  . 

Cash,  Freight 

26 

75 

V 

Cash,  Dray  age 

1 

25 

7 

62 

Storage 

4 

60 

inmen 

71 

V 

t  No.  2 

Commission  at  5  per  cent 
Cash,  Remitted  ck.  for  proceeds 

T.  L.  MANFORD  6  CO. 

48 

35 

80 
885 

95 

95 

966 

90 

Consii 

Jan. 

\ 
12 

Received  per  C.  &  N.  W.  R.  R. 
1  car  Apples,  175  brls. 

CHARGES 

13 

V 

Cash,  Freight 

43 

50 

14 

V 

Cash,  Dray  age 

3 

75 

20 

62 

Storage 

2 

50 

71 
94 

Commission 

T.  L.  M.  &  Co.,  proceeds  on  acct. 

13 

85 

63 
213 

60 

40 

277 

BUSINESS  FORMS 


63 


THE  COMMISSION  SALES  LEDGER 

This  is  a  book  for  keeping  an  itemized  account  of  the  different  consignments  received. 
These  are  designated  by  number,  and  in  the  order  in  which  the  goods  are  received  as  "Con. 
1,"  "Con.  2,"  "Con.  3,"  etc. 

When  the  goods  arrive,  they  are  compared  with  the  invoice  of  shipment,  and  a  memo- 
randum entry  is  made  on  the  debit  side  of  the  account.  If  freight  charges  are  paid,  an  entry 
is  made  in  the  cash  book  debiting  the  consignment.  When  sales  are  made,  they  are  entered 
in  the  commission  sales  book,  as  explained  on  page  61.  Debits  from  the  cash  book  and 
credits  from  the  commission  sales  book  are  posted  to  the  commission  sales  ledger  like  other 
posting,  except  that  all  entries  are  itemized. 

When  all  the  goods  belonging  to  a  consignment  have  been  sold,  the  commission  and 
other  charges,  if  any,  are  entered  and  the  net  proceeds,  or  the  difference  between  the  total 
charges  and  total  sales,  is  entered  on  the  debit  side,  as  shown  in  the  form,  and  the  consign- 
ment is  closed.  All  debit  entries  in  a  consignment  account  should  have  corresponding  credit 
entries  in  the  cash  book  or  ledger. 

In  "Con.  No.  1,"  as  here  presented,  the  proceeds  are  remitted  in  cash.  In  "Con.  No.  2," 
the  proceeds  are  credited  to  the  account  of  the  consignor.  When  this  is  done,  an  account 
with  the  consignor  should  be  opened  in  the  ledger,  and  the  net  proceeds  posted  to  the  credit 
of  this  account.  When  a  trial  balance  is  taken,  the  unbalanced  consignments  should  be  in- 
cluded, the  same  as  regular  ledger  accounts. 

LEDGER 
ROCK  ISLAND,  ILL. 


19_ 
Jan. 


S.  B. 

4 

27 

5 

29 

6 

31 

40  cs.  Eggs 

20  tubs  Butter,  990  lb. 

60  cs.  Eggs 

30  tubs  Butter,  1490  lb. 


4.50 
.20 

4.60 
.21 


FRUITVILLE,  WIS. 


19_ 
Jan. 


15 

42 

17 

44 

19 

49 

1 

80  brl.  Apples 
50    " 
20    " 
25    " 


1.60 
1.50 
1.70 
1.60 


64 


ADVANCED  ACCOUNTING 


CONSIGNMENT  ACCOUNTS  IN  LEDGER 

In  a  business  having  but  few  consignments  for  sale  on  commission,  consignment  accounts 
can  be  kept  in  the  ledger  with  all  debits  and  credits  itemized,  a  memorandum  entry  being 
made  when  the  consignment  is  received  giving  the  items  and  the  terms  of  the  consignment. 
In  such  case  the  debits  for  commission  and  other  charges  can  be  entered  in  the  journal  and 
posted  to  the  consignment  account  later. 

CONS'T  OF  CRESCENT  MILLS,  FALLS  CITY 


200  Sks.  Flour 

19.. 

3 

Rate  of  Com.  10  cts.  sk. 

3 

20 

19.. 
Nov. 

3 

20  sacks  Flour                1.40  s 

2 

28 

Nov. 

Cash  Freight                       C 

4 

Cash  on  acct.                      C 

3 

75 

25      " 

1.40  s 

2 

35 

5 

Commission                         J 

3 

20 

35      " 

1.40  s 

2 

49 

6 

Check,  net  proceeds          J 

5 

160 

75 

4 
5 

10      " 
25      " 
20      " 
15      " 
50      " 

1.40  s 
1.40  s 
1.35  s 
1.35  s 
1.35  s 

3 
2 
3 
3 
4 

14 
35 
27 
20 

67 

25 
50 

275 

75 

275 

75 

ACCOUNT  SALES 

This  is  an  itemized  account,  rendered  by  the  consignee,  or  Commission  Merchant,  to  the 
shipper  or  owner  of  the  goods,  at  the  time  when  all  or  part  of  the  goods  in  a  given  shipment 
have  been  sold.  It  shows  all  sales  and  charges  and  the  net  proceeds,  or  difference  between 
the  total  sales  and  total  charges.     See  the  accompanying  form. 

Form  of  Account  Sales. 


BUSINESS  FORMS 


65 


COMMISSION  HOUSE  CHARGES 

In  rendering  account  sales  of  consignments  in  this  set  the  commission  firm  will  make  the 
following  charges : 

Freight  as  they  are  required  to  pay  it.  Drayage,  2  cts.  per  cwt.  (gross  weight)  ;  Stor- 
age, iy2  cts.  per  cwt.  (gross  weight)  ;  Insurance,  Vg  of  one  per  cent  of  the  amount  of  the 
sale;  and  Commission,  2]/2  per  cent  of  the  amount  of  the  sale. 

JOURNAL  MEMORANDA 

It  is  frequently  necessary  to  make  a  record,  or  memorandum,  of  certain  matters  per- 
taining to  the  business,  that  do  not  involve  book  entries.  These  memoranda  are  made  in  the 
journal,  and  may  include  agreements  relating  to  rent,  advertising,  the  employment  of  help, 
etc.  Orders  by  mail  for  merchandise,  when  a  copy  of  the  letter  is  not  retained,  should  be 
thus  recorded  in  the  Journal. 

The  accompanying  form  illustrates  the  manner  of  making  journal  memoranda. 

MODEL  MEMORANDUM   ENTRIES  IN  JOURNAL 


JL~. 


V 


^a. 


7 


7 


J.O 


_-t5?— 


66 


ADVANCED  ACCOUNTING 


TELEGRAPHING 

Telegrams  of  ten  words  or  less  are  charged  for  at  certain  rates  which  vary  with  the 
number  of  times  the  message  must  be  "repeated,"  or  retelegraphed,  during  the  course  of 
transmission. 

For  messages  of  more  than  ten  words  there  is  an  additional  charge  for  each  extra  word. 
It  therefore  becomes  important  for  those  who  do  business  by  telegraph  to  learn  to  write  their 
messages  in  the  fewest  words  possible.  In  telegraphing  it  is  customary  to  omit  all  words  not 
absolutely  necessary  to  the  understanding  of  the  message.  Notice  how  this  is  accomplished 
in  the  following  examples : 


Message 

The  "Acme"  brand  of  starch  is  out  of 
stock.  Shall  we  ship  our  "Nonpariel,"  which 
is  about  the  same  grade?  Please  telegraph 
us. 

(24  words.) 


Condensed 

Out  of  "Acme"  starch.     Can  ship 
pariel"  same  grade.    Wire. 
(10  words.) 


'Non- 


I  have  succeeded  in  effecting  a  satisfactory 
settlement    with    the    Consolidated    Coal    & 
Iron  Co.  and  shall  start  for  Chicago  tonight. 
Will  see  you  at  Palmer  -House  Saturday. 
(28  words.) 


Satisfactory  settlement  with  Consolidated. 
Leave  tonight.    At  Palmer  House  Saturday. 
(10  words.) 


Please  ship  by  express  as  soon  as  possible, 
forty  copies  Brown's  Arithmetic.     Will  re- 
mit cash  on  receipt  of  goods. 
(19  words.) 


Express  C.  O.  D.  Forty  Brown's  Arith- 
metic.    Rush. 

(6  words.) 


EXAMPLES  SHOWING  CONDENSATION  OF  PHRASES,  CLAUSES,  ETC. 

1.     If  the  sale  is  to  be  made  today,  tele- 

1. 

If  sale  today,  wire. 

graph  me  at  once. 

2.     Please  ship  at  once  by  Express. 

2. 

Express. 

3.     The  attorneys  for  the  parties  who  be- 

3. 

Plaintiff's  attorneys. 

gan  suit. 

4.     It  is  generally  believed  that  the  fire  is 

4. 

Incendiarism  suspected. 

the  work  of  an  incendiary. 

5.     The    Warriner    Manufacturing     Co. 

5. 

Warriner  people  want  forty  thousand. 

will  not  sell   for  less  than   forty  thousand 

dollars. 

6.     Telegraph  me  at  once. 

6. 

Wire. 

RULES  RELATING  TO  TELEGRAPH  MESSAGES 

1.  Figures  are  never  telegraphed,  but  if  written  in  a  message  are  estimated  according 
to  the  number  of  words  required  to  write  them  out.  Thus,  "$1974"  would  be  telegraphed 
"nineteen   seventy-four  dollars" — four  words. 

Hyphenated  words,  as  half -morocco,  twenty-five,  eight-pound,  letter-heads,  etc.,  are 
counted  as  two  words.  In  names,  each  given  name  or  initial  counts  as  a  separate  word. 
Thus  the  name  J.  M.  Jones,  would  be  charged  for  as  three  words,  should  it  occur  in  the  body 
of  a  message.  The  initials  C.  O.  D.  (Collect  on  Delivery),  F.  O.  B.  (Free  on  Board),  A.  M., 
and  a  few  other  abbreviations  go  as  one  word. 

3.  •  Telegrams  may  be  prepaid,  or  sent  "collect,"  that  is  to  be  paid  for  by  the  person  to 
whom  the  message  is  sent.  As  a  rule  telegrams  should  be  sent  prepaid,  but  they  may  be  sent 
"collect"  when  they  relate  to  business  in  which  the  person  to  whom  they  are  sent  is  interested. 


BUSINESS  FORMS 


67 


ACCOUNTS  WITH  STOCKS 

The  term  stocks,  or  stocks  and  bonds,  includes  shares  in  joint  stock  companies  or  cor- 
porations, and  bonds  issued  by  government,  state,  county,  township,  or  city,  and  by  trans- 
portation and  manufacturing  companies. 

Stocks,  being  a  variety  of  property  account,  is  debited  and  credited  the  same  as  other 
property  titles.  The  accountant  will  keep  a  separate  ledger  account  with  each  variety  of 
stocks  that  comes  into  the  business,  naming  them  after  the  corporation  to  which  they  belong. 
Stocks  should  be  debited  for  their  cost  and  for  any  assessments  we  may  have  to  pay  while  a 
stockholder ;  and  credited  for  values  received  from  them  either  in  sales  or  dividends. 

A  certificate  of  stock  may  include  any  number  of  shares  and  the  par  value  of  a  share 
may  be  any  amount,  subject  to  statutory  legislation,  that  may  be  agreed  upon  by  the  parties 
forming  the  corporation.  The  usual  par  value  of  a  share  is  one  hundred  dollars.  The 
amount  paid  for  the  shares  of  stock  represented  in  a  certificate  may  be  less  or  more  than  the 
par  or  face  value.  The  amount  paid  or  received  for  stock  will  be  the  amount  recorded  in 
case  of  a  purchase  or  sale,  regardless  of  the  par  value. 

Stock  is  transferred  by  indorsement  on  the  back  of  the  certificate,  surrendering  the  own- 
ership and  directing  transfer  to  the  person  named  in  the  indorsement. 


REAL  ESTATE  TRANSFERS 

The  ownership  of  Real  Estate  is  usually  transferred  by  means  of  a  written  agreement 
called  a  Deed,  and.  in  the  ordinary  form  called  a  Warranty  Deed.  The  party  signing  the 
deed  is  called  the  Grantor  and  the  party  receiving  the  deed  is  called  the  Grantee. 

A  Warranty  Deed  names  the  consideration  or  money  value,  the  party  granting  and  the 
party  receiving  the  land,  with  a  description  of  the  exact  location  of  the  premises,  and  the 
grantor  agrees  to  warrant  and  defend  the  grantee  in  the  possession  of  the  property  described. 


68  ADVANCED  ACCOUNTING 


The  party  receiving  the  deed  should  file  it  for  record  at  the  Recorder's  office  for  the 
county  in  which  it  is  located,  and  this  record  protects  him  in  the  ownership  of  the  land,  un- 
less other  claims  have  been  recorded  against  the  land  before  his  deed  is  placed  on  record. 

The  form  below  represents  the  standard  form  of  warranty  deed,  and  the  usual  method 
of  describing  city  property,  unless  the  property  belongs  to  an  irregular  platting  or  survey. 

WARRANTY   DEED 


IN  CONSIDERATION  OF 

Eight  Thousand DOLLARS, 

100 
/,  Charles  H.  Hunter _______ 

of Linn County,  State  of Iowa hereby  SELL  AND  CONVEY  unto 

David  Collins 

of  the  County  of  Linn  and  State  of  Iowa 


the  following  described  premises  in  the  County  of Linn State  of Iowa to-wit: 

Lot  Three  (3),  Block  Twenty-nine  (29),  further  known  as  Nos.  194.  196.  and  198  Fourth  Avenue, 
College  City,  Iowa: 

And { do  hereby  covenant  for  my heirs  and  personal  representatives  with  the  said 

David  Collins,        his heirs  and  assigns  that l  am lawfully  seized 

of  the  said  premises,  that  the  same  are  free  from  incumbrance 


that. [ will  make  such  other  and  further  assurance  of  said  premises  as  shall  be  lawfully 

and  reasonably  advised,  devised  or  required,  and  that [ will  forever  WARRANT  AND 

DEFEND  the  same  against  lawful  claims  and  demands  of  all  persons.      And  I,       Katherine  E. 

Hunter wjfe  0f  the  said Charles  H .  Hunter for  ^e  foregoing  consideration  do 

hereby  relinquish  all  my  right  of  dower  and  homestead  in  the  above  described  premises. 
Signed  this       Fifth        dav  of       September       A.  D->  19 

Charles  H.  Hunter 


Katherine  E.  Hunter 


State  of       Iowa 
Linn        County. 


ss.  On  this  Fifth         dav  of  September  A    D     19 

in  and  for  said  County,   personally  came Charles  H .  Hunter 

and  Katherine  E.  Hunter,  his  wife 

to  me  personally  known  to  be   the    identical    person  s   whose    name  s 


naannnnn 


□  uuuuuuu  are    affixed  to  the  above  Deed  as  Grantor  s  ,   and  acknowledged  the 

same  to  be their         voluntary  act  and  deed. 

WITNESS  my  hand  and  ^ss~*s*^~>.seal~x^^r*^.         the 

day  and  year  last  above  written. 

Henrv  C.  Stanton, 


o  n 

□□□□□nan 


Notary  Public. 


BUSINESS  FORMS  69 


REAL  ESTATE  MORTGAGE 


100 


DOLLARS, 


IN  CONSIDERATION  OF 

Six  Thousand 

I,  (David  Collins),  not  married, 

of  Linn County,  State  of  Iowa hereby  SELL  AND   CONVEY  unto 

Charles  H.  Hunter 

■of   the  County  of        Linn  State  of         Iowa        the  following 


described  premises  in  the  County  of         Linn State  of  Iowa  to-wit: 

Lot  Three  (.?) ,  Block  Twenty-nine  (29^,  otherwise  known  as  Nos.    194,   196  and  198  Fourth 
Avenue,  College  City,  Iowa. ' 


And  ^ do  hereby  covenant  for  mV         heirs  and  personal  representatives  with  the  said 

Charles  H.  Hunter,  his heirs  and   assigns  that         l  am  lawfully  seized  of  the   said 

premises,  that  the  same  are  free  from  incumbrance 

and  that  l will  forever  WARRANT  AND  DEFEND  the  same  against  lawful  claims  of  al 

hereby  relinquish  all  my  right  of  dower  in  the  above  described  premises. 

To  be  void  upon  condition  tnat  tne  following  promissory  notes  with  accruing  interest  are  fully 
paid . 


Note  for  $1500  dated  Sept 

5. 

19 , 

due  in  30  days,  with  interest  at  6  per  cent. 

(i 

1500 

tt 

5, 

19 , 

'•     60           "                      "     6 

ti 

1500 

<  < 

5, 

19 

"     90            "                       "     6 

(< 

1500 

•i 

5, 

19 

"  120            "                        "     6        " 

BSTAnd  it  is  further  agreed  that  if  suit  for  the  foreclosure  hereof  is  commenced,  $_JJ?£_ 


attorney  fee  shall  by  the  said  David  Collins be  paid  to  the  holder  hereof,  and  in  the  event 

of  foreclosure  hereof,  $  1 00*s\s>^s*x^-&ttorTiev  fee  shall  by  the  Court  be  included  in  the  decree 
of  foreclosure  and  included  in  the  judgment  that  may  be  entered  in  said  suit,  and  this  mortgage  shall 
stand  as  security  for  the  same,  equally  as  security  for  said  notes. 

Signed  this        Fifth         day  of        September        A,  D->  19 

David  Collins 


David  Collins's  signature  should  be  acknowledged  before  a  Notary  Public,    the  same  as  the  signatures 
on  the  deed,  this  acknowledgement  appearing  on  the  back  of  the  mortgage. 


70 


ADVANCED  ACCOUNTING 


A  Real  Estate  Mortgage  is  a  transfer  of  ownership  of  the  property  described,  given 
as  security  for  the  payment  of  certain  written  obligations,  usually  promissory  notes.  If  the 
notes  are  fully  paid,  the  transfer  is  void.  If  the  notes  are  not  fully  paid,  the  party  to  whom 
the  mortgage  has  been  given  has  the  right  to  demand  the  possession  of  the  property. 

In  order  that  a  mortgage  may  precede  other  claims  against  the  property,  it  should  be 
filed  for  record,  the  same  as  a  deed. 

Release  of  Mortgage.  If  a  recorded  mortgage  secures  the  payment  of  notes  and  the 
notes  are  afterward  fully  paid,  a  paper  stating  that  fact,  called  a  Release  of  Mortgage, 
should  be  signed  and  acknowledged  by  the  grantee  of  the  mortgage.  The  release  of  mort- 
gage should  be  recorded  the  same  as  a  deed  or  a  mortgage.  By  examining  the  books  in  the 
Recorder's  Office,  we  can  ascertain  the  exact  ownership  of  a  piece  of  land  or  a  town  lot,  and 
we  can  also  determine  whether  there  are  any  claims  against  the  property. 

The  form  of  mortgage  on  page  69  represents  the  standard  form  of  mortgage  given  by 
the  grantee  of  a  piece  of  real  estate  to  secure  payment  of  part  of  the  original  consideration 
named  in  the  deed.     The  form  below  represents  the  standard  form  of  a  release  of  mortgage : 


RELEASE  OF  MORTGAGE 


1,. 


Charles  H.  Hunter, 


.of   the   County  of_ 


Linn 


State  of 


Iowa 


do  hereby  acknowledge  that      ^ul1      payment  has  been  made  of  a  certain 

bearing   date      September  5,        1fl_ made  and  executed  by David  Collins 

to_        Charles  H.  Hunter  and  recorded  in  the  records  of  Linn 

Sixth 


.Mortgage 


County. 


Iowa 


Book  L 


-Page, 


214 


on  the 


day  of        September        19- (   and   hereby   discharge 


the  same  from  record 

Signed  this        Fifteenth       day  of        November        19- 


Charles  H.  Hunter 


STATE  OF_ 

County  of 


Iowa 


Linn 


ss. 


On  this        Fifteenth 


day  of_ 


November 


19—       ,    before   me,    a 


Notary  Public 


in  and  for  said  county,  personally  appeared  the  above  named 

to  me  personally  known  to  be  the  identical  person  who 

executed  the  above  release,  and  acknowledged  the  execution  of  the  same  to  be *"s  voluntary  act 


Charles  H.  Hunter 


and  deed. 


□□□nnnDn 

□  □ 

g      SEAL      g 

□  □ 

nnnnnnnn 


Witness  my  hand  and. 
last  above  written. 


.seal. 


.the  day   and  year 


Henry  C.  Stanton 


Notary  Public 


BUSINESS  FORMS 


71 


BILL  OF  SALE 

A  bill  of  sale  is  a  paper  describing  movable  or  personal  property,  and  transferring  the 
ownership  of  the  same  from  seller  to  buyer.  The  bill  of  sale  usually  gives  the  consideration 
or  price  received  for  the  property,  the  name  of  the  purchaser,  the  description  and  location  of 
the  property,  the  date  of  the  sale,  and  the  name  of  the  person  who  sells  or  transfers  the  prop- 
erty. Only  one  copy  of  the  bill  of  sale  is  necessary,  which  is  given  to  the  buyer  as  proof  to 
other  parties  that  he  is  the  owner  of  the  property  described. 

FORM   OF  BILL  OF  SALE 


Twelve  Hundred 


DOLLARS 


In  Consideration  of 

Student  &  Co. 0f  the  County  of         Linn         State  of        lo^><1         do  hereby  sell  and 

Simmons  &  Co. 0f  the  County  of         Linn         state  of        Iowa         the 

following  described  personal  property,  now  in  the  possession  of Student  &  Co. jn 


convey  unto_ 


College  City 


Linn       County       Iowa       to-wit: 


The  scales,  measures,  trucks  and  other  store  appliances,  now  situated  in  the  warehouse.  No.  29 
Elm  Street. 


And  we  do  hereby  covenant  and  agree    to    warrant    and    defend    the    said    described    personal 
property  against  the  lawful  claims  of  all  persons. 


Signed 

this                 Twentieth 

Iowa          ] 

vss. 
County,  j 

Twentieth 

Tl 

day  of 

November                A.  D.. 
Student  &  Co. 

19 

per  Student 

1 

■  19 

STATE  OF 
Linn 

On  this 

dav  of                     November                     A.  D. 
a  Notary  Public             jn  and  for  said  County. 
xe  Student,  one  of  the  firm  of  Student  &  Co. 

i 
before  me 

personally  came 
to   me    personally 

nnnnnnnn 
□  □ 

°    seal    ° 

a  □ 

nnnnnnnn 


known    to    be    the    identical    person whose    name is    affixed    to    the 

above  Bill  of  Sale  as  graitor ,    and   acknowledged   the   same   to   be 

the     voluntary  act  and  deed  of  said  firm  by  him  duly  authorized  to 
execute  the  same. 


Witness  my  hand  and. 
written. 


seal         the  day  and  year  last  above 


C.  N.  Hedges, 


Notary  Public. 


72  ADVANCED  ACCOUNTING 


DISSOLUTION  OF  PARTNERSHIP 

When  a  firm  dissolves  partnership,  a  notice  of  the  dissolution  should  be  published  in  the 
newspapers  of  the  town  where  the  firm  has  been  located,  and  if  the  firm  has  unsettled  ac- 
counts with  other  persons,  each  of  these  persons  should  receive  a  notice  of  the  dissolution, 
stating  the  conditions  on  which  the  accounts  are  to  be  settled. 

FORM  OF  NOTICE  OF  DISSOLUTION 

The  partnership  heretofore  existing  between  (The  Student)  and  A.  H.  Norton,  under 
the  firm  name  of  (Student)  &  Co.,  is  this  day  dissolved  by  mutual  consent.  Accounts  due 
the  firm  are  to  be  paid  to  A.  H.  Norton,  and  all  claims  against  the  firm  should  be  presented 
to  him  for  settlement.  THE  STUDENT. 

A.  H.  NORTON. 

College  City,  Dec.  1,  19 — 


SET  SIX. 

Business  Practice  in  Jobbing  and  Commission. 


In  the  following  business  practice  the  student  will  engage  in  business  for  himself,  carry- 
ing out  the  business  transactions,  writing  the  proper  business  forms,  and  keeping  books  as  far 
as  is  practicable,  exactly  as  he  would  do  in  real  business.  He  is  to  buy  and  sell,  and  engage 
in  other  business  dealings,  strictly  in  accordance  with  the  instructions  accompanying  the 
Routine  of  Transactions. 

If  the  student  uses  bound  blanks,  he  will  require  a  journal,  purchase  book,  cash  book, 
bill  book,  and  ledger  ruled  like  those  used  in  Set  Five.  His  sales  book  will  have  three 
amount  columns,  and  he  will  require  an  extra  blank  book  for  consignment  accounts.  If  he 
uses  the  loose  leaf  blanks,  he  will  require  paper  in  the  several  binders  as  scheduled  in  the 
next  paragraph. 

Use  one  sheet  journal  ruling  for  Journal,  two  sheets  journal  ruling  for  Purchase 
Book,  three  sheets  three-column  journal  ruling  for  Sales  Book,  one  sheet  bills  receivable  and 
bills  payable  ruling  for  Bill  Book,  three  sheets  journal  ruling  for  Cash  Book,  two  sheets 
special  ruling  for  Trial  Balances,  six  sheets  two-account  ledger  ruling  with  index  sheet  for 
Ledger,  and  two  sheets  of  half-page  journal  ruling  for  Commission  Sales  Ledger.  The  bal- 
ance sheets  required  at  the  close  of  Sections  Five  and  Eleven  can  be  written  on  a  sheet  of 
six-column  balance  sheet  paper. 

1.     The  student  will  form  a  partnership  with  A.  H.  Norton  to  engage  in  the  jobbing 

and  commission  business  at  No.  , street,  under  the  firm  name  of  Student 

(your  name)  &  Norton.  You  are  each  to  devote  your  time  to  the  business,  each  receiving  a 
salary  of  $100  per  month,  and  sharing  equally  in  the  gain  or  loss. 

The  student  invests  cash  $3000,  which  you  will  find  in  your  cash  envelope. 

Norton  invests  a  stock  of  coal  and  wood  inventoried  at  $2695.40,  warehouse  fixtures, 
inventoried  at  $404.60,  and  accounts  receivable  from  responsible  firms — A.  R.  Preston, 
Houston  (the  student  will  supply  the  state  when  it  is  not  given),  $129.16;  G.  E.  Anderson, 
Norton,  $212.50;  Carter  Bros.,  Dover,  $156.75;  R.  C.  Smith  &  Co.,  Logan,  $92.50.  The 
firm  assumes  pavment  of  Norton's  accounts  payable — Western  Fuel  Co.,  Central  City, 
$244.43;  Union  Coal  Co.,  Central  City,  $212.89;  Dows  &  Clark,  City,  $233.59.  (See 
Agreement  of  Copartnership,  page  58.) 

Write  two  copies  of  Agreement  of  Copartnership,  signing  both.  Leave  one  copy  with  the  teacher  and 
ask  him  to  represent  Norton  in  signing  the  other  copy,  which  you  will  keep.  Make  the  required  entries  in 
your  cash  book  and  journal. 

All  business  transactions  in  this  course  are  adapted  to  either  the  office  or  the  tablet 
method  of  business  practice.  In  the  office  course  the  student  will  carry  out  the  given  trans- 
actions at  one  of  the  office  departments,  and  in  the  tablet  course  all  transactions  will  be  car- 
ried out  by  means  of  booklet  forms  and  papers  in  his  equipment.  Instructions  pertaining 
especially  to  the  office  method  will,  be  given  in  short  lines  on  the  left  half  of  the  page,  and 
instructions  for  the  tablet  method  will  be  given  on  the  right  half  of  the  page.  All  lines 
extending  across  the  page  are  intended  for  both  courses. 

If  you  are  using  the  office  method,  the  necessary  papers,  with  a  few  exceptions,  will  be 
filled  out  for  you  by  the  office  department. 

If  you  are  using  the  tablet  method,  the  incoming  papers  (that  is,  those  you  are  supposed 
to  receive  from  those  with  whom  you  do  business)  are  furnished  in  the  pads  or  booklets 
in  your  business  practice  equipment. 

—73— 


74  ADVANCED  ACCOUNTING 


In  the  incoming  papers  from  the  tablet,  the  place  of  business  and  date  are  left  blank, 
and  there  is  a  blank  space  for  the  student's  name.  These  blank  spaces  should  be  properly 
filled  as  the  papers  are  removed  from  the  tablet.  In  business,  the  papers  would,  of  course, 
be  complete,  but  in  this  work  the  space  for  the  date  and  the  receiver's  name  are  left  blank, 
in  order  that  the  student  may  use  the  name  of  his  own  town,  the  current  date,  and  his  own 
name  in  carrying  out  the  transactions. 

2.  Rent  a  warehouse  for  three  months,  at  the  monthly  rate  named  in  your  price  list, 
payable  as  instructed  in  your  routine.  Fill  out  and  sign  two  leases  in  duplicate,  using  the 
firm  name  below  for  the  first  party  named  in  the  lease.     ( See  page  43. ) 

Office  Course.  Carry  out  your  renting  trans-  Tablet  Course.  The  warehouse  you  are  rent- 
actions  at  the  Real  Estate  Office  or  the  Commercial  ing  belongs  to  the  Coleman  Real  Estate  Co.,  who  will 
Exchange,  as  the  teacher  may  direct,  using  the  firm  be  the  first  named  party  in  your  lease.  Take  both 
name  designated  by  the  office  as  the  property  owner  lease  copies  to  your  teacher  who  will  sign  one  for 
or  first  party  in  your  lease.  The  given  office  will  sign  the  above  firm  and  return  it  to  you,  and  will  keep 
and  return  to  you  one  lease  copy  and  will  keep  the  the  other, 
other. 

Fold  and  indorse  your  lease  copy  and  file  it  in  your  office  file  in  "Letters  and  Documents"  envelope. 

3.  Pay  cash  for  your  first  month's  rent,  taking  a  receipt. 

Office  Course.     Make  this  payment  at  the  office  Tablet  Course.     Place  the  currency  you  are  to 

where  you  left  the  lease.     If  you   cannot   make  the  pay  in  the  envelope  marked  "Community  Cash,"  tak- 

exact  change,  the  office  will  make  change  for  you,  or  ing  the  required  change  from  this  envelope.    The  rent 

if  they  are  very  busy  you  can  get  change  at  bank  and  receipt  will  be  found  in  your  Commercial  Exchange 

make  the  exact  payment.     The  office  will  give  you  a  Pad. 
receipt. 

Disposal  of  Receipts.  A  receipt,  a  receipted  bill,  or  any  similar  evidence  of  payment, 
is  called  a  voucher.  Such  vouchers  are  always  kept  on  file.  In  this  course  they  should  be 
placed  in  the  envelope  marked  "Receipts  and  Vouchers." 

4.  Open  a  bank  account  and  deposit  $2900.  Leave  your  signature  at  bank,  the  same 
as  you  will  write  it  on  your  checks  and  other  commercial  papers.     (See  pages  33  and  34.) 

Office   Course.     Carry   out  this   and   all   other  Tablet  Course.     You  will  find  a  signature  card 

banking  transactions  at  the  College  Bank.  Leave  in  your  equipment.  Write  your  signature  on  this 
your  signature  on  a  card  or  in  a  signature  book,  as  card  and  leave  it  with  the  outgoing  papers  with  your 
the  bank  may  require.  The  banker  will  make  the  deposit  ticket.  Place  all  outgoing  currency  in  corn- 
deposit  entry  in  your  pass  book.  munity  cash.     Make  the  proper  deposit  entry  in  your 

pass  book. 

5.  Sell  to  T.  Jacobs,  252  Second  Ave.  (C.  E.  Jones,  teamster)  receiving  his  check  in 
payment : 

2  cords  Stove  Wood  @     $3.00 

1  ton  No.  3  Hard  Coal  @       8.25 

Office  Course.     Deliver  a   receipted  bill  with-  Tablet  Course.     Deliver  the  receipted  bill  with 

out  merchandise  at  the  Commercial  Exchange  and  the  outgoing  papers  and  remove  the  check  from  the 
receive  the  check.  Commercial  Exchange  Pad. 

In  the  instructions  for  a  local  sale,  the  name  of  the  teamster  who  is  to  deliver  the  fuel  is  given  in 
parenthesis. 

The  student  will  use  the  same  style  of  bill  heads  for  billing  all  sales,  local  and  out-of-town.  In  local 
bills  give  the  name  of  the  teamster  who  delivers  the  items  in  space  "How  Shipped,"  and  in  out-of-town  bills 
give  the  name  of  the  railway  company  and  the  number  of  the  car  or  cars  if  in  carload  shipments.  The  team- 
ster's  name   should   be  written   in  the   sales  book  entry,  preferably  on  the  left  margin. 

See  form  of  receipting  a  bill  on  page  46. 

See  Commission  Sales  Book  page  61.  The  student  will  have  many  sales  of  commission  goods  in  this 
set,  and  for  this  reason  he  will  carry  items  of  merchandise  into  Merchandise  column. 

6.  Gve  your  check  to  the  Victor  Scale  Co.  for  $125  for  a  set  of  Platform  Scales.  (See 
Bank  Checks,  pages  34  and  35.) 

Office  Course.     Deliver  the  check  to  the  Com-  Tablet  Course.     Leave  the  check  with  the  out- 

mercial  Exchange  clerk,  and  take  a  receipted  bill.  going  papers  and  take    the    receipted   bill   from   the 

Commercial   Exchange   Pad. 

Keep  this  bill  in  your  office  file  in  envelope  marked  "Invoices  for  Filing,"  until  you  are  directed  to  paste 
your  invoices  in  the  Invoice  File. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  75 

7.  Make  an  estimate  of  the  amount  of  Coal  and  Coke  that  will  be  required  to  fill  the 
orders  in  Letters  No.  1,  2,  and  3,  and  order  the  required  amount  from  your  wholesale  firm. 

Use  an  order  sheet  from  your  duplicate  order  book,  sending  the  original  and  keeping 
the  carbon  duplicate  in  your  order  book.  Request  them  to  ship  by  the  Business  College 
Railway,  (abbreviated  B.  C.  Ry.)  and  to  bill  the  merchandise  on  account  at  fifteen  days. 

Write  a  letter  enclosing  the  order  blank,  and  inform  the  above  firm  that  you  have  just 

commenced  business  with  Bills  Receivable,  Merchandise,  and  Cash,  amounting  to  $ 

(total  of  invested  resources),  and  accounts  payable  amounting  to  $ (total  of  in- 
vested liabilities.)  Give  your  bank  and  your  commercial  teacher  as  references.  Place  the 
letter  and  order  in  an  envelope  properly  addressed  and  stamped,  using  college  postage.  (See 
page  56.) 

Office    Course.      In    your    dealings    with    the  Tablet  Course.     The  Union  Coal  Co.  will  rep- 

Wholesale  Office  use  the  firm  name  assigned  to  that  resent  your  Wholesale  firm,  and  your  letter  should 
office.  be  addressed  to  them. 

Deliver  the  letter  unsealed  to  the  teacher,  who  will  examine  and  "O.  K."  it  before  delivering  it  to  the 
firm  addressed. 

8.  Pay  cash  $10  to  the  Coleman  Real  Estate  Co.  for  one  month's  rent  of  coal  yard 
from  this  date. 

Proceed  as  in  Transaction  3,  without  giving  a  lease. 

9.  Sell  to  J.  B.  Ellis,  R.  F.  D.  No.  29,  who  takes  the  coal  in  his  own  wagons,  giving 
his  note  in  payment : 

4  tons  No.  2  Hard  Coal  @     $7.50 

Leave  the  receipted  bill  at  the  Commercial  Exchange  and  receive  his  note  in  payment. 
In  the  blank  space  on  left  margin  of  bill  head  "How  Shipped."  write  "Delivered."     Receipt  the  bill  in 
the  following  manner :     "Received  Payment  by  note  at  five  days,"  signing  your  firm  name. 

10.  Buy  grain  from  E.  M.  Powers,  R.  F.  D.  No.  19,  per  Grain  Ticket  No.  1,  at  your 
buying  prices,  giving  your  check  in  payment. 

Make  this  payment   at  the   Commercial   Exchange  where,  you  will  receive  the  grain  ticket. 
Keep  the  grain  ticket  in  your  Merchandise  envelope  until   you  are   directed  to   dispose  of  the  grain  it 
represents. 

11.  Sell  to  E.  G.  Andrews,  613  Fourth  Avenue  (A.  R.  Stone,  teamster)  receiving  his 
check  and  note  in  payment : 

5  tons  No.  1  Hard  Coal  @     $8.75 
2  tons  No.  2  Soft  Coal                       @       6.35 

Proceed  as  in  Transaction  5. 

12.  Buy  grain  from  C.  C.  Barton,  R.  F.  D.  No.  21,  per  Grain  Ticket  No.  2,  at  your 
buying  prices,  giving  your  check  for  one-half  of  the  amount  and  your  note  at  ten  days  for 
the  balance. 

Proceed  as  in  Transaction  10.  , 

13.  Sell  to  A.  A.  Lester,  319  Third  Street  (E.  C.  Henry,  teamster)  receiving  cash  in 
payment : 

2  cords  Cord  Wood  @     $6.50 

2  tons  No.  1  Coke  @       6.50 

3  tons  No.  3  Hard  Coal  @       8.25 

Office   Course.     Carry  out   this   transaction   at  Tablet  Course.     Leave  the  receipted  bill  with 

the  Commercial  Exchange.  outgoing  papers,   and    receive   the   cash   from   "Com- 

munity Cash"  envelope. 

14.  Give  your  check  for  $150  to  Lockwood  &  Gardiner  for  an  office  safe,  taking  a  re- 
ceipted bill. 

Leave  the  check  at  the  Commercial  Exchange.  Leave  check  with  outgoing  papers. 

15.  Buy  grain  from  H.  C.  Preston,  R.  F.  D.  No.  4,  per  Grain  Ticket  No.  3,  at  your 
buying  prices,  on  account. 


76  ADVANCED  ACCOUNTING 


16.  Sell  to  R.  E.  Sherwood,  227  Fourth  Avenue  (C.  W.  Jones,  teamster)  on  account: 

2  cords  Stove  Wood  @     $3.00 

2  tons  No.  2  Coke  @       8.50 

3  tons  No.  3  Soft  Coal  @       6.25 

17.  Buy  grain  from  Charles  Lambert,  R.  F.  D.  No.  17,  Per  Grain  Ticket  No.  4,  at 
your  buying  prices,  on  account. 

Grain  Ticket  No.  4  is  left  blank  for  the  student  to  fill  in  the  total  weights  as  given  in  his  directory  card. 

18.  Make  an  estimate  of  all  grain  you  have  on  hand  of  the  variety  purchased  in  trans- 
action 17,  represented  by  Grain  Ticket  No.  5,  which  you  will  ^complete,  writing  the  total 
number  of  bushels  bought  less  a  shrinkage  of  190  lbs.  for  screening.  File  away  the  grain 
tickets  from  which  you  have  transferred  amounts  to  No.  5,  to  your  envelope  in  Office  File, 
marked  "Invoices  for  Filing." 

Make  a  shipment  of  the  grain  represented  on  ticket  No.  5  to  your  commission  firm  to 
sell  for  you  on  commission,  prepaying  the  freight  by  check  and  taking  a  consignor's  expense 
bill. 

Send  an  invoice  of  shipment  and  the  bill  of  lading  in  envelope,  addressed  and  stamped, 
delivering  the  same  unsealed  to  the  teacher. 

Office  Course.     Maks  this  consignment  to  the  Tablet  Course.     Maks  this  consignment  to  the 

firm  represented  at  your  Commission  Office.  Leave  Central  Commission  Co.,  Central  City.  Leave  the 
the  Elevator  Ticket  (representing  the  grain)  and  the  Elevator  Ticket  (representing  the  grain)  and  the 
shipping  bills  at  the  Freight  Office,  taking  the  freight  original  shipping  order  with  outgoing  papers,  assum- 
agent's  signature  on  the  shipping  memorandum  and  ing  that  the  agent  has  signed  the  shipping  memo- 
bill  of  lading.  Hand  your  check  for  freight  to  the  randum  and  bill  of  lading.  Also  leave  your  check 
freight  agent  and  receive  a  consignor's  expense  bill.        for    freight    and    take   your    consignor's    expense   bill 

from  the   Freight    Office  pad. 

In  connection  with  Transaction  18,  read  Invoices  of  Shipment  page  57,  Shipping  Order  and  Bill  of 
Lading  page  44,  Consignor's  Expense  Bill  page  60,  and  Memorandum  Entry  of  a  Shipment  page  60. 

19.  Sell  M.  I.  Martin,  318  Second  Street  (A.  R.  Stone,  teamster)  receiving  cash  in 
payment : 

4  tons  No.  3  Hard  Coal  @  $8.25 
1  ton  No.  3  Soft  Coal  @  6.25 
1  cord  Stove  Wood  @       2.75 

Proceed  as  in  Transaction  13. 

20.  Indorse  the  two  checks  you  have  received  and  deposit  them  in  bank  together  with 
currency  as  given  on  your  price  list.  (See  Indorsing  Checks,  page  36,  and  Deposit  Ticket 
with  Checks,  page  34.) 

Proceed  as  in  Transaction  2. 

Prove  your  cash,  using  one  of  your  cash  proof  blanks,  and  balance  your  cash  book. 
(See  The  Daily  Cash  Proof,  page  59.) 

After  proving  and  balancing  cash,  file  your  cash  proof  in  Letters  and  Documents  en- 
velope. 

Post  your  ledger  and  take  a  trial  balance. 

As  Expense  is  one  of  the  most  important  accounts  in  the  business  and  one  that  is  likely  to  be  studied 
carefully  by  the  proprietor,  it  will  be  well  in  posting  expense  entries,  to  write  in  the  explanation  column  of  this 
account  the  item  for  which  Expense  has  been  debited  or  credited.  A  study  of  these  items  may  enable  the 
proprietor  to  make  plans  that  will  reduce  his  expenses  if  they  are  too  large  in  comparison  with  his  profits. 

For  your  ledger  use  six  sheets  of  two-account  ledger  ruling  with  a  two-page  index  at- 
tached to  outside  sheet  for  indexing  the  accounts.  Page  your  ledger  before  you  make  any 
posting  entries.  Index  each  account-title  as  soon  as  you  enter  it  in  the  ledger.  Place  the 
partner's  accounts  on  page  1,  and  other  general  accounts  on  successive  pages  in  the  order  of 
their  first  appearance,  allowing  one-half  page  to  each  account.  Begin  purchase  accounts  on 
page  11,  giving  each  account  one-half  page.  Begin  sales  accounts  on  page  16,  giving  each 
account  one-half  page.     Post  from  the  original  books  in  the  order  given  on  page  20. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  77 

SECTION  TWO 

21.  The  merchandise  ordered  in  Transaction  7  should  now  be  ready  for  delivery. 

Office  Course.    The  invoice  from  the  Whole-  Tablet   Course.     You  will   find  the  invoice  in 

sale  Office  will  be  delivered  to  you.  Call  at  the  your  pad  of  Invoices  and  the  expense  bill  and  freight 
Freight  Office,  or  the  place  designated  by  the  teacher  receipt  in  the  pad  in  Freight  Office.  Sign  the  freight 
for  the  merchandise,  giving  your  check  for  the  freight  receipt  without  removing  it  from  the  pad.  Leave 
at  the  rates  named  in  your  price  list,  and  taking  an  your  check  for  freight  with  outgoing  papers,  and  re- 
expense  bill  for  a  receipt  and  signing  a  freight  receipt.        move  the  expense  bill  from  the  pad. 

If  the  Wholesale  Office  is  not  open,  the  teacher 
will  hand  you  the  merchandise  cards  and  you  can 
estimate  the  amount  of  the  invoice,  using  your  buy- 
ing prices. 

Merchandise  cards  will  be  used  in  the  Office  Course  only  in  case  of  carload  shipments,  and  they  will  be 
omitted  entirely  in  the  Tablet  Course. 

See  Receiving  Shipments,  page  45. 

Prove  and  enter  the  invoice  for  this  merchandise.  Mark  this  Invoice  No.  1,  and  dis- 
pose of  it  as  instructed  on  page  46.  File  your  invoice  in  Papers  for  Filing,  and  your  ex- 
pense bill  in  Receipts  and  Vouchers  envelope  in  your  Office  File. 

22.  Make  an  estimate  of  the  amount  of  Coal  and  Coke  that  will  be  required  to  fill  the 
orders  in  Letters  No.  6,  8,  and  9,  and  order  the  required  amount  on  account  from  your 
wholesale  firm. 

Proceed  as  in  Transaction  7. 

23.  Buy  grain  of  C.  C.  Carter,  R.  F.  D.  No.  16,  per  Grain  Ticket  No.  6,  on  account. 

24.  Fill  the  order  received  in  Letter  No.  1,  shipping  the  coal  by  B.  C.  Railway,  freight 
unpaid,  and  billing  at  the  selling  prices  in  your  price  list,  giving  the  terms  2/10  n/30.  (See 
Terms  of  Sale,  page  47.) 

Office   Course.     Leave   the   merchandise   cards  Tablet    Course.     Leave    the    original    shipping 

and  the  shipping  bills  at  the  Freight  Office,  taking  the  order  with  outgoing  papers,  assuming  that  the  freight 

freight   agent's   signature   on   the  bill   of   lading  and  agent   has   signed    the    bill    of    lading  and   shipping 

shipping  memorandum.  memorandum. 

See  Shipping  Order  and  Bill  of  Lading,  page  44. 

Hand  the  invoice  and  bill  of  lading  in  envelope  properly  addressed,  to  the  teacher  for  mailing. 

25.  Buy  grain  from  H.  C.  Preston,  R.  F.  D.  No.  4,  per  Grain  Ticket  No.  7,  on  your 
account. 

26.  Fill  the  order  received  in  Letter  No.  2,  shipping  freight  unpaid  and  billing  on  ac- 
count, 2/10  n/30. 

Proceed  as  in  Transaction  24. 

27.  Sell  to  D.  W.  Wells,  392  Eighth  Street  (E.  C.  Henry,  teamster)  on  account,  re- 
ceiving his  check  for  $100  to  apply  in  part  payment : 

10  tons  No.  1  Hard  Coal  @     $8.75 

5  tons  No.  3  Hard  Coal  @       8.25 

28.  Fill  the  order  received  in  Letter  No.  3,  shipping  freight  unpaid,  and  billing  on  ac- 
count, 2/10  n/30. 

29.  Reply  to  Letter  No.  4  from  Grant  &  Co.,  asking  them  to  send  you  a  consignment 
of  Cranberries  which  you  will  sell  for  them  on  commission,  charging  5  per  cent  of  the  gross 
sales.  Request  them  also  to  send  some  Sweet  Potatoes  if  they  have  a  supply  of  good  quality. 
Hand  your  letter,  properly  addressed,  to  the  teacher  for  mailing. 

30.  Buy  grain  from  E.  M.  Powers,  R.  F.  D.  No.  19,  per  Grain  Ticket  No.  8,  giving 
your  note  at  10  days  in  payment  with  interest  at  the  rate  of  6  per  cent  per  annum. 

Grain  Ticket  No.  8  is  left  blank  for  the  student  to  fill  in  the  total  weights  as  given  on  his  price  list. 

31.  Make  an  estimate  of  all  grain  you  have  on  hand  of  the  variety  purchased  in  Trans- 
action 30,  transferring  the  amount  to  Grain  Ticket  No.  9,  after  deducting  325  lbs.  for 
screening. 


78  ADVANCED  ACCOUNTING 


Ship  the  grain  represented  by  ticket  No.  9  to  your  commission  firm  for  sale  on  commis- 
sion, prepaying  the  freight  by  check. 
Proceed  as  in  Transaction  18. 

32.  Sell  to  R.  A.  Jones,  116  First  Street  (C.  W.  Jones,  teamster)  receiving  cash  in 
payment : 

3  tons  No.  2  Coke  @     $8.50 

2  cords  Cord  Wood  @       6.50 

2  tons  No.  3  Soft  Coal  @       6.25 

33.  Receive  a  consignment  of  fruit  from  the  Chalmers  Fruit  Co.,  Pensacola,  Fla.,  to 
sell  for  them  on  commission,  paying  freight  by  check. 

Receive  the  invoice  through  your  Letter  Pad  (No  5)  and  the  expense  bill  at  the  Commercial  Exchange. 
Deliver  your  check  favor  the  Commercial  Railway  with  outgoing  papers  for  $54.75,  in  payment  of  the  freight 
charges,  without  signing  a  freight  receipt. 

Read  Consignments  and  Consignment  Accounts  on  page  62,  and  Commission  Sales  Ledger,  page  63,  and 
open  an  account  with  Consignment  No.  1. 

34.  Sell  to  G.  C.  Denton,  217  Second  Street  (A.  R.  Stone,  teamster)  receiving  his 
note  at  10  days  for  $46.20,  and  cash  for  the  balance : 

6  tons  No.  2  Hard  Coal  @     $8.50 

2  cords  Stove  Wood  @       2.60 

35.  Sell  to  Simmons  &  Co.,  122  Second  Street,  on  account: 

10  bunches  Bananas  (Const.  1)         @     $1.25 
6  boxes  Oranges  (Const.  1)  @       3.00 

Be  careful  to  extend  this  sale  in  the  proper  columns  in  the  Sales  Book.     (See  page  61.) 

36.  Sell  to  Hart  Bros.,  216  First  Avenue,  for  cash : 

12  bunches  Bananas  (Const.  1)         @     $1.25 
10  boxes  Oranges  (Const.  1)  @       3.00 

37.  Buy  a  draft  at  Bank  favor  the  Union  Coal  Co.,  for  $133.52,  to  apply  on  their  ac- 
count. Give  your  check  to  the  bank  to  pay  for  the  draft  and  for  exchange,  20  cents.  Write 
a  letter  enclosing  this  draft  and  place  all  in  an  envelope  properly  addressed  and  stamped. 
Fland  the  envelope  unsealed  to  the  teacher. 

Office  Course.     Leave  the  check  at  bank  and  Tablet    Course.    Leave    the    check    with    out- 

receive  the  draft.  going  papers,  and  take  the   draft  from  the   Banking 

Pad. 
See  Bank  Drafts,  page  38. 

38.  Pay  cash  to  your  teamsters  for  delivering  wood  and  coal,  sold  to  city  customers 
in  Sections  One  and  Two,  at  the  following  rates :  Coal  and  Coke,  25  cents  per  ton,  Stove 
Wood,  25  cents  per  cord,  Cord  Wood,  50  cents  per  cord. 

Office    Course.     Pay    this    cash    to    the    Com-  Tablet  Course.     Place  the  required  amount  of 

mercial  Exchange  without  receipt.  currency  in  Community  Cash,  taking  back  change  if 

necessary.     No  receipt. 

39.  Employ  Walter  Davis  as  shipping  clerk  at  a  salary  of  $8  per  week,  beginning  to- 
day. Make  a  memorandum  entry  in  your  journal,  but  make  no  payments  until  directed  to 
do  so. 

See  Journal  Memoranda,  page  65. 

40.  Indorse  and  deposit  the  check  you  have  on  hand  together  with  currency  as  per 
price  list. 

Prove  your  cash  as  you  were  directed  to  do  at  the  close  of  Section  One,  and  balance 
your  cash  book. 

Post  your  ledger  and  take  a  trial  balance. 

The  consignment  accounts  in  the  Commission  Sales  Ledger  are  ledger  accounts,  and  if  any  of  these  ac- 
counts are  unbalanced,  they  should  appear  in  the  trial  balance. 

In  posting  Bills  Receivable  and  Bills  Payable,  if  the  maker's  name  is  written  in  the  explanation  column, 
it  will  assist  in  checking  these  accounts  with  the  bill  book  entries. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  79 

SECTION  THREE 

41.  Enter  the  account  sales  of  your  first  shipment  to  your  commission  firm,  Trans- 
action 18.    Net  proceeds  will  be  on  account  until  you  are  directed  to  draw  draft. 

See  Account  Sales,  page  64,  and  Memorandum  Entry  of  a  Shipment,  and  Entry  of  the  Net  Proceeds  of 
a  Shipment,  page  60. 

Office  Course.    You   will   receive  the   account  Tablet    Course.     Remove  the  account  sales  from 

sales  from  the  Commission  Office.  your  Commission  Pad. 

The  student  should  verify  the  account  sales,  estimating  the  grain  as  sold  at  his  quoted  selling  price. 
The  commission  house  charges  are  given  on  page  65. 

42.  Estimate  the  amount  of  Coal  and  Coke  that  will  be  required  to  fill  the  orders  in 
Letters  11,  12,  and  13,  and  order  the  required  amount  from  your  wholesale  firm,  asking 
them  to  draw  on  you  at  sight  for  the  amount  after  allowing  their  cash  discount. 

43.  Buy  grain  from  E.  M.  Powers,  R.  F.  D.  No.  19,  per  Grain  Ticket  No.  10,  on  ac- 
count. 

44.  The  merchandise  ordered  in  Transaction  22  should  now  be  ready  for  delivery. 
Give  your  check  to  pay  the  freight  charges. 

Proceed  as  in  Transaction  21. 

45.  Fill  the  order  received  in  Letter  No.  6,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent,  subject  to  sight  draft. 

Proceed  as  in  Transaction  24. 

See  sale  to  C.  S.  Peters  with  discount  in  Commission  Sales  Book,  page  61. 

46.  Draw  at  sight  on  the  firm  to  whom  you  made  shipment  in  Transaction  45,  for  the 
net  amount  of  the  invoice  and  leave  the  draft  at  bank  for  collection.  (See  Drafts  and  Ac- 
ceptances, page  40.) 

Make  the  proper  stub  entry  in  your  draft  book.  No  other  entry  is  required  until  you  are  advised  of  the 
payment  of  the  draft. 

Office  Course.     Leave  this  draft  at  your  Bank.  Tablet    Course.     Leave    this    draft    with    out- 

going papers. 

47.  Receive  a  consignment  of  Cranberries  and  Sweet  Potatoes  from  Grant  &  Co., 
Grantville,  Wis.,  to  sell  for  them  on  commission,  giving  your  check  for  $35  favor  the  Com- 
mercial Railway  for  the  freight  charges. 

Proceed  as  in  Transaction  33  (Letter  Pad  No.  7),  Consignment  Account  No.  2  in  your  Commission 
Sales  Ledger. 

48.  Sell  to  Bartley  &  Brown,  108  Second  Street,  on  account: 

5  bunches  Bananas  (Const.  1)  @  $1.25 

5  boxes  Oranges  (Const.  1)  @  3.00 

5  brl.  Cranberries  (Const.  2)  @  6.75 

4  brl.  Sweet  Potatoes  (Const.  2)  @  3.50 

Proceed  as  in  Transaction  35. 

49.  Fill  the  order  received  in  Letter  No.  8,  shipping  freight  unpaid  and  billing  at  2/10 
n/30. 

50.  Sell  to  E.  A.  Pelton,  219  Second  Avenue  (E.  C.  Henry,  teamster)  receiving  his 
note  in  payment : 

2      tons  No.  3  Hard  Coal  @     $8.25 

2y2  tons  No.  1  Hard  Coal  @       8.75 

1      cord  Cord  Wood  @       5.20 

51.  Buy  grain  from  G.  C.  Barton,  R.  F.  D.  No.  21,  per  Grain  Ticket  No.  11,  giving 
your  check  in  payment. 


80  ADVANCED  ACCOUNTING 


52.  Sell  to  Hart  Bros.,  216  First  Avenue,  on  account: 

4  brl.  Cranberries  (Const.  2)  @     $6.75 

5  brl.  Sweet  Potatoes  (Const.  2)      @       3.50 

6  bunches  Bananas  (Const.  1)  @       1.25 

53.  Fill  the  order  received  in  Letter  No.  9,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent,  subject  to  sight  draft. 

54.  Draw  at  sight  on  the  firm  to  whom  you  made  shipment  in  Transaction  53,  for  the 
net  amount  of  the  invoice,,  and  leave  the  draft  at  bank  for  collection. 

Proceed  as  in  Transaction  46. 

55.  Buy  grain  from  G.  E.  Kingman,  Edgewood,  per  Grain  Ticket  No.  12,  giving  in 
payment  your  note  for  20  days,  with  interest  at  six  per  cent. 

Grain  Ticket  No.  12  is  left  blank  for  the  student  to  fill  in  the  total  weights  as  given  on  his  price  list. 

56.  Make  an  estimate  of  all  grain  you  have  on  hand  of  the  variety  purchased  in  Trans- 
action 55,  transferring  the  amount  to  Grain  Ticket  No.  13,  after  deducting  294  lbs.  for 
screening. 

Ship  the  grain  represented  by  ticket  No.  13  to  your  commission  firm  for  sale  on  commis- 
sion, prepaying  the  freight  by  check. 

Proceed  as  in  Transaction  18. 

57.  Sell  to  Post  Milling  Co.,  1229  Seventh  Avenue  (C.  W.  Jones,  teamster)  receiving 
their  check  in  payment: 

50  tons  No.  3  Soft  Coal  @     $5.00 

58.  Pay  cash  to  the  Central  Stationery  Co.  (Commercial  Exchange)  $4  for  books  and 
stationery  for  office,  taking  a  receipt. 

59.  Pay  cash  to  your  teamsters  for  delivering  wood  and  coal  sold  to  city  customers  in 
Section  Three  at  the  rates  named  in  Transaction  38. 

Proceed  as  in  Transaction  38. 

60.  Indorse  and  deposit  the  check  you  have  on  hand  and  currency  as  per  price  list. 
Prove  and  balance  cash. 

Post  your  ledger  and  take  a  trial  balance. 

SECTION  FOUR 

61.  Enter  the  account  sales  of  the  shipment  to  your  commission  firm  in  Transaction  31. 

Proceed  as  in  Transaction  41. 

62.  Buy  a  draft  at  bank  favor  the  Union  Coal  Co.  for  $79.37,  giving  your  check  for 
the  draft  and  for  exchange  10  cents.  Send  the  draft  to  the  Union  Coal  Co.  to  pay  balance 
of  old  account. 

Proceed  as  in  Transaction  37. 

63.  Sell  to  C.  P.  Manderson,  333  Fourth  Street  (A.  R.  Stone,  teamster)  receiving  his 
note  for  $58.25,  and  cash  for  balance : 

5  tons  No.  3  Hard  Coal  @     $8.25 

4  tons  No.  1  Soft  Coal  @       6.75 

Deliver  a  receipted  bill,   receiving  note  for  $58.25,  and  cash  for  balance. 

64.  Receive  a  consignment  of  Grapes  and  Apples  from  H.  T.  Davis,  Batavia,  N.  Y., 
to  sell  for  him  on  commission,  giving  your  check  for  $52.50,  favor  the  Commercial  Railway 
for  the  freight  charges. 

Proceed  as  in  Transaction  33,  opening  consignment  account  No.  3.     (Letter  No.  10.) 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  81 


65.  Sell  to  J.  R.  Stone,  210  Third  Street,  on  account,  receiving  his  check  for  $75  to 
apply  in  part  payment : 

5  bunches  Bananas  (Const.  1)  @  $1.25 

8  boxes  Oranges  (Const.  1)  @  3.00 

2  brl.  Cranberries  (Const.  2)  @  6.75 

3  brl.  Sweet  Potatoes  (Const.  2)  @  3.50 
10  boxes  Grapes  (Const.  3)  @  .25 
10  brl.  Apples  (Const.  3)  @  2.75 

66.  Estimate  the  amount  of  Coal  and  Coke  that  will  be  required  to  fill  the  orders  in 
Letters  15,  16,  and  17,  and  order  the  same  from  your  wholesale  firm  on  account. 

67.  Buy  grain  from  Charles  Lambert,  R.  F.  D.  No.  17,  on  account,  per  Grain  Ticket 
No.  14. 

68.  The  merchandise  ordered  in  Transaction  42  should  now  be  ready  for  delivery. 
Give  your  check  to  pay  the  freight  charges. 

Proceed  as  in  Transaction  21. 

69.  Fill  the  order  received  in  Letter  No.  11,  shipping  freight  unpaid  and  billing  at 
2/10  n/30. 

70.  Draw  on  your  commission  firm  at  sight  for  the  net  proceeds  reported  in  Trans- 
action 41.  Deposit  the  proceeds  of  this  draft  in  bank  after  deducting  a  discount  of  one-half 
of  one  per  cent  from  the  face  of  the  draft.     (Cash  Book  entries — Interest  and  Discount.) 

A  discount  ticket  will  not  be  required  in  this  transaction,  as  full  explanation  can  be  given  on  the  de- 
posit ticket. 

In  filling  your  deposit  ticket,  follow  the  model  form  below,  changing  the  amounts: 

St.  Draft  Com.  Co.  $360.20 

y2%  Dis.  1.80 

Proceeds  Deposited  $358.40 

71.  Buy  grain  from  C.  C.  Carter,  R.  F.  D.  No.  16,  per  Grain  Ticket  No.  15,  on  ac- 
count. 

72.  Fill  the  order  received  in  Letter  No.  12,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent  subject  to  sight  draft. 

73.  Draw  at  sight  on  the  firm  to  whom  you  made  shipment  in  Transaction  72,  for  the 
amount  of  the  invoice  and  leave  the  draft  at  bank  for  collection. 

74.  Fill  the  order  received  in  Letter  No.  13,  shipping  freight  unpaid  and  billing  2/10 
n/30. 

75.  Accept  the  discount  offer  in  Letter  No.  14  from  the-  Western  Fuel  Co.,  and  send 

them  your  check  in  full  less  the  discount. 

Mail  the  check,  with  letter  acknowledging  the  receipt  of  their  letter.  (Cash  Book  entries — Merchandise 
Discount  Cr.) 

76.  Your  bank  reports  that  they  have  collected  the  draft  which  you  drew  in  Transac- 
tion 46.  The  bank  deducts  for  collection  charges,  10  cents  for  every  hundred  dollars  or  part 
of  a  hundred  collected.  As  an  illustration,  the  collection  charges  on  $916.79  would  be  $1, 
10  cents  per  $100  on  $900  and  10  cents  for  the  $16.79.  Receive  credit  on  your  pass  book 
for  the  proceeds  of  the  draft. 

Make  the  required  entries  in  the  cash  book,  crediting  the  firm  that  paid  the  draft  in  full,  and  debiting 
Expense  for  the  collection-  Write  across  the  stub  entry  in  the  draft  book  "Paid  and  credited"  with  the  cur- 
rent date. 

77.  Receive  cash  from  the  Commercial  Railway  (Commercial  Exchange)  $10  for 
over-charge  on  freight  on  Consignment  No.  3,  Transaction  64,  giving  your  receipt  for  same. 

78.  Sell  to  D.  W.  Wells,  392  Eighth  Street  (E.  C.  Henry,  teamster)  on  account: 

3  tons  No.  2  Hard  Coal  @     $8.50 

2  tons  No.  2  Coke  @      7.25 

79.  Pay  cash  to  your  teamsters  for  delivering  wood  and  coal  sold  to  city  customers  ifi 
Section  Four  at  the  rates  named  in  Transaction  38.     No  receipt. 


82  ADVANCED  ACCOUNTING 


80.  Indorse  and  deposit  the  check  you  have  on  hand  and  currency  as  per  price  list. 
Prove  and  balance  cash. 

Post  your  ledger,  rule  up  the  personal  accounts  that  are  in  balance,  and  take  a  trial 
balance. 

SECTION  FIVE 

81.  Enter  the  account  sales  of  the  shipment  to  your  commission  firm  in  Transaction  56. 
Proceed  as  in  Transaction  41. 

82.  Pay  cash  for  shipping  clerk's  salary,  $8. 

Office  Course.     Make  payment  at  Commercial  Tablet   Course.     Place   the   currency   in   Com- 

Exchange.  munity  Cash. 

83.  Sell  to  the  Central  Coal  Co.,  210  First  Street  (delivered  to  their  own  teamster) 
receiving  their  check  in  payment: 

2  tons  No.  2  Coke  @     $7.00 

1  cord  Stove  Wood  @       2.00 

84.  Draw  on  your  commission  firm  at  sight  for  the  net  proceeds  reported  in  Transac- 
tion 61.  Deposit  the  proceeds  of  this  draft  in  bank  after  deducting  a  discount  of  one-half  of 
one  per  cent  from  the  face  of  the  draft. 

Proceed  as  in  Transaction  70. 

85.  Draw  a  check  in  your  own  favor  for  $50,  also  a  check  in  favor  of  A.  H.  Norton 
for  $50  in  payment  of  estimated  salaries  to  date.  Have  these  checks  certified  at  bank,  deliv- 
ering Norton's  check  to  the  teacher  and  holding  your  own  check  until  instructed  to  dispose 
of  it.     (See  Certified  Checks,  page  38.) 

Office    Course.     The    bank    teller    will    certify  Tablet  Course.     The  student  will  write  "Certi- 

these  checks  and  return  them  to  you.  fied,"  and  the  current  date  across  these  checks,  and 

pass  them  to  the  teacher  for  his  signature  as  teller. 

86.  The  merchandise  ordered  in  Transaction  66  should  now  be  ready  for  delivery. 
Give  your  check  to  pay  the  freight  charges. 

Proceed  as  in  Transaction  21. 

87.  Your  bank  reports  that  they  have  collected  the  draft  you  drew  in  Transaction  54. 
The  bank  deducts  collection  charges  estimated  at  the  same  rate  as  in  Transaction  76.  Re- 
ceive credit  on  your  pass  book  for  the  proceeds  of  the  draft. 

88.  Receive  check  from  E.  A.  Pelton  in  payment  of  his  note  received  in  Transaction 
50. 

Cancel  the  note,  marking  across  the  face  of  it  "Paid"  and  the  date.  Deliver  the  cancelled  note  and 
receive  the  check. 

89.  Give  your  check  to  C.  C.  Barton  to  pay  your  note  given  in  Transaction  12. 

Office  Course.     Receive  the  cancelled  note  at  Tablet  Course.    Take  the  note  from  the  out- 

the   Commercial   Exchange.  going  papers   and  hand   it  to  the  teacher,   who   will 

write  across  the  note  "Paid"  with  the  date. 
File  the  cancelled  note  in  Receipts  and  Vouchers. 

90.  Indorse  and  deposit  the  checks  you  have  on  hand. 
Prove  and  balance  your  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  in  balance,  and  take  a  trial 
balance. 

Pass  your  Outgoing  Papers  File  to  the  teacher  for  inspection. 
Make  a  six-column  balance  sheet,  using  the  following  inventories : 

Merchandise  in  Coal  Yard  not  represented  by  tickets $2027.59 

All  car  loads  of  Coal  and  Coke  on  hand  at  invoice  cost  and  Freight. 

All  grain  on  hand  represented  by  grain  tickets  at  cost 

Warehouse  Fixtures    675.00 

Prepaid  Expense  Items  (paid  for  but  not  used)    3.50 

Prepaid  Rent 8.75 

Interest  Payable,  6  days  on  note  favor  G.  E.  Kingman,  at  the  given 

rate,  and  12  days  on  note  favor  E.  M.  Powers,  at  the  given  rate 

N0TE. — In  estimating  interest  inventories,  follow  the  rule  for  fractional  amounts,  the  same  as  if  you  were 
computing  interest  for  payment  on  each  note  individually. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  83 

Divide  the  net  gain  according  to  the  partnership  agreement. 

Close  the  general  ledger  accounts,  except  the  partners,  Bills  Receivable,  and  Bills  Pay- 
able, using  the  data  in  your  balance  sheet,  and  bring  down  balances  and  inventories  for  a 
continuation  of  the  business. 

Make  a  trial  balance  of  the  ledger  after  closing. 

Prove  your  Bills  Receivable  and  Bills  Payable  accounts  by  comparing  them  with  notes 
on  hand  and  outstanding. 

The  grain  tickets  in  the  filing  envelope  can  be  placed  in  a  letter  envelope  marked  "Grain 
Tickets  Filed."    They  should  be  kept  for  reference  in  case  of  a  disputed  entry. 

Call  for  your  bank  statement  and  your  paid  checks,  and  compare  the  latter  with  the  en- 
tries of  same  in  your  check-stubs.  If  any  checks  are  unpaid,  their  sum  added  to  your  bank 
balance  shown  on  your  last  check-stub  will  equal  the  balance  as  given  in  the  bank  statement. 

Office  Course.     You  will   receive  the  statement  Tablet  Course.    The  teacher  will  return  your 

and  the  paid  checks,  cancelled,  at  your  Bank.  file    for    outgoing   papers,    together   with    the    checks 

issued,  and  you  will  find  the  bank  statement  among 
See  the  Depositor's  Statement,  page  36.  the  incoming  documents.     Cancel  all  returned  checks. 

Fold  your  cancelled  checks  in  the  bank  statement  sheet,  marking  across  the  top  of  the  package,  "Can- 
celled checks  (Student)  &  Norton ■,  19 — ,"  (date    of   first   check)    "to ,    19 — ,"    (date    of   last 

check.) 

File  the  package  in  your  Receipts  and  Vouchers  envelope. 

SECTION  SIX 

91.  Buy  grain  from  E.  M.  Powers,  R.  F.  D.  No.  19,  per  Grain  Ticket  No.  16,  on  ac- 
count. 

The  student  will  complete  this  ticket  by  filling  in  the  weights  as  given  on  his  price  list. 

92.  Ship  all  grain  you  have  on  hand  of  the  variety  purchased  in  Transaction  91  to  your 
commission  firm  for  sale  on  commission,  prepaying  the  freight  by  check. 

Complete  grain  ticket  No.  17,  writing  the  total  bushels  of  Barley  you  have  purchased,  less  128  lb.  for 
screening. 

Proceed  as  in  Transaction  18. 

93.  Take  out  an  insurance  policy  for  three  months  in  the  Commercial  Insurance  Co. 
for  $500,  covering  merchandise  you  may  own  or  may  hold  as  selling  agent  in  the  warehouse 
you  are  now  renting.     Pay  the  premium  in  cash,  $4. 

The  student  will  find  the  insurance  policy  in  Incoming  Documents.  He  should  fill  in  the  date  and 
location,  the  latter  to  correspond  with  the  location  given  in  his  lease. 

Open  an  account  with  Insurance,  as  a  part  of  this  insurance  will  be  credited  back  from  your  consign- 
ments. 

94.  Deduct  the  discount  offered  in  the  invoice  received  in  Transaction  21,  and  send  the 
wholesale  firm  a  check  for  the  proceeds  of  the  invoice  after  discount.  Enclose  the  check  in 
a  letter  properly  directed  and  stamped  for  mailing. 

Hand  the  letter  to  the  teacher,  as  usual. 

95.  Fill  the  order  received  in  Letter  No.  15,  shipping  freight  unpaid  and  billing  at 
2/10  n/30. 

96.  Sell  to  Bartley  &  Brown,  108  Second  Street,  on  account: 

30  bunches  Bananas  (C-l)  @  $1.25 

20  boxes  Oranges  (C-l)  @  3.00 

5  brl.  Cranberries  (C-2)  @  6.75 

25  boxes  Grapes  (C-3)  @  .25 

97.  Dows  &  Clark  offer  you  a  special  discount  of  5  per  cent  for  early  payment  of  their 
account.  Accept  their  offer  and  give  them  your  check  in  full  of  their  account,  less  the  dis- 
count offered,  taking  a  receipt.     (Commercial  Exchange.) 


84  ADVANCED  ACCOUNTING 


98.  Allow  A.  R.  Preston  a  discount  credit  of  2  per  cent  on  the  bill  sent  him  in  Trans- 
action 24.  Make  a  statement  of  his  account  including  the  discount  credit  and  write  on  the 
lower  part  of  the  statement  that  you  will  draw  at  sight  for  the  net  amount  and  request  him 
to  honor  the  draft  when  presented.     Mail  this  statement  in  the  usual  manner. 

See  Statements  of  Account,  page  51. 
Make  this  credit  in  the  journal. 

99.  Draw  on  A.  R.  Preston  in  favor  of  your  bank  for  the  amount  due  from  him  as 
per  statement  rendered  in  preceding  transaction  and  leave  the  draft  at  bank  for  collection. 

100.  Fill  the  order  received  in  Letter  No.  16,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent,  subject  to  sight  draft. 

101.  Draw  at  sight  on  the  firm  to  whom  you  made  shipment  in  Transaction  100,  for 
the  net  amount  of  the  invoice  and  leave  the  draft  at  bank  for  collection. 

102.  Receive  cash  from  J.  B.  Ellis  in  payment  of  his  note,  received  in  Transaction  9, 
with  20  days'  interest  at  6  per  cent  per  annum,  because  the  note  is  estimated  that  long  past 
due. 

Leave  the  note  marked  "Paid"  at  the  Commercial  Exchange. 

103.  Buy  grain  from  H.  C.  Preston,  R.  F.  D.  No.  4,  per  Grain  Ticket  No.  18,  on  ac- 
count. 

104.  Fill  the  order  received  in  Letter  No.  17,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent,  subject  to  sight  draft. 

105.  Draw  at  sight  on  the  firm  to  whom  you  made  shipment  in  Transaction  104,  for 
the  net  amount  of  the  invoice  and  leave  the  draft  at  bank  for  collection. 

106.  Receive  a  consignment  of  Lemons  and  Oranges  from  Jones  &  Pratt,  Riverside, 
California,  to  sell  for  them  on  commission,  giving  your  check  for  $145.31  for  the  freight 
charges. 

Proceed  as  in  Transaction  33,  opening  consignment  account  No.  4.     (Letter  No.  18.) 

107.  Give  H.  C.  Preston  your  check  to  apply  on  account,  $200. 

108.  Sell  to  R.  E.  Sherwood,  227  Fourth  Avenue,  on  account : 

27  bunches  Bananas  (C-l)  @     $1.25      • 

16  boxes  Oranges  (C-l)  @       3.00 

109.  Your  bank  reports  the  collection  of  the  draft  left  with  them  in  Transaction  73. 
The  bank  deducts  collection  charges  estimated  as  in  Transaction  76.  Receive  credit  on 
your  pass  book  for  the  proceeds  of  the  draft. 

110.  Receive  cash  from  E.  G.  Andrews  to  pay  the  note  received  in  Transaction  11 
with  interest  at  6  per  cent  per  annum,  for  ,21  days,  the  period  past  due. 

Prove  and  balance  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  in  balance,  and  take  a  trial  bal- 
ance. 

SECTION  SEVEN 

111.  Sell  to  Simmons  &  Co.,  122  Se.cond  Street,  on  account: 

30  bunches  Bananas  (C-l)  @  $1.25 

10  boxes  Oranges  (C-l)  @  3.00 

8  brl.  Cranberries  (C-2)  @  6.75 

8  brl.  Sweet  Potatoes  (C-2)  @  3.50 

5  boxes  Lemons  (C-4)  @  4.25 

112.  Pay  cash  to  C.  W.  Jones  for  drayage  of  Bananas  and  Oranges  belonging  to  Con- 
signment No.  1,  $2.25. 

113.  Estimate  the  amount  of  Coal  and  Coke  that  will  be  required  to  fill  the  orders  in 
Letters  19  and  20,  and  order  the  same  from  your  wholesale  firm  on  account. 

114.  Debit  Consignment  No.  1  for  insurance  75  cents  and  for  commission  5  per  cent 
of  the  total  amount  of  the  sales.  Close  the  consignment,  sending  an  account  sales  to  the 
Chalmers  Fruit  Co.,  and  giving  them  credit  for  the  net  proceeds,  subject  to  their  sight  draft. 

Enclose  the  account  sales  in  an  envelope  properly  addressed  for  mailing. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  85 

115.  Allow  G.  E.  Anderson  a  discount  credit  of  2  per  cent  on  the  bill  sent  him  in 
Transaction  26.  Render  a  statement  of  his  account,  including  the  discount  credit  and  give 
notice  of  your  sight  draft  for  the  amount  due. 

Proceed  as  in  Transaction  98. 

116.  Draw  on  G.  E.  Anderson  at  sight  as  per  notice  in  preceding  transaction  and  leave 
the  draft  at  bank  for  collection. 

117.  Buy  grain  from  C.  C.  Carter,  R.  F.  D.  No.  16,  per  Grain  Ticket  No.  19,  on  ac- 
count. 

The  student  will  complete  this  ticket  by  filling  in  the  weights  as  given  on  his  price  list. 

118.  Ship  all  grain  you  have  on  hand  of  the  variety  purchased  in  Transaction  117  to 
your  commission  firm  for  sale  on  commission,  prepaying  the  freight  by  check. 

Complete  Grain  Ticket  No.  20,  writing  the  total  bushels  of  Rye  you  have  purchased,  less  104  lb.  for 
screening. 

Proceed  as  in  Transaction  18. 

119.  Sell  your  entire  stock  of  wood,  coal,  and  coke  kept  for  sale  at  retail  in  your  coal 
yard,  to  the  Central  Coal  Co.,  for  $2250,  taking  in  payment  fifteen  shares  of  Central  Com- 
mercial Railway  stock  at  90,  and  three  notes  for  $300  each  signed  by  the  Central  Coal  Co. 
and  clue  in  5,  10,  and  15  days,  respectively,  each  note  drawing  interest  at  6  per  cent. 

Deliver  a  bill  of  sale  to  the  teacher  and  receive  the  notes  and  stock  certificates  from  the 
Central  Coal  Co.  in  your  Incoming  Documents  envelope. 

Enter  in  Sales  Book. 

See  Accounts  with  Stocks,  page  67,  and  Bill  of  Sale,  page  71. 

120.  Deduct  the  discount  offered  in  the  invoice  received  in  Transaction  44,  and  send 
the  wholesale  firm  a  check  for  the  proceeds  of  the  invoice  after  discount. 

Proceed  as  in  Transaction  94. 

121.  Draw  on  your  commission  firm  at  sight  for  the  net  proceeds  debited  in  Trans- 
action 81.  Deposit  the  proceeds  of  this  draft  after  deducting  a  discount  of  one-half  of  one 
per  cent  from  the  face  of  the  draft. 

Proceed  as  in  Transaction  70. 

122.  Receive  cash  from  G.  C.  Denton  in  payment  of  the  note  received  in  Transaction 
34.  The  note  is  estimated  18  days  overdue  and  you  will  accordingly  collect  interest  on  the 
note  at  6  per  cent  for  that  period. 

123.  Give  your  check  to  E.  M.  Powers  to  pay  the  note  given  in  Transaction  30,  with 
interest  for  20  days  at  the  given  rate. 

Proceed  as  in  Transaction  89. 

124.  Allow  Carter  Bros,  a  discount  credit  of  2  per  cent  on  the  bill  sent  them  in  Trans- 
action 49.  Render  a  statement  of  their  account  including  the  discount  credit,  and  notify 
them  that  you  will  draw  at  sight  for  the  net  amount  due. 

Proceed  as  in  Transaction  98. 

125.  Draw  on  Carter  Bros,  at  sight  as  per  notice  in  Transaction  124  and  leave  the 
draft  at  bank  for  collection. 

126.  Sell  5  shares  of  your  Central  Commercial  Railway  stock  to  R.  W.  Thomas  at  95, 
receiving  his  check  for  same  at  the  Commercial  Exchange. 

Make  the  proper  indorsement  on  the  back  of  the  certificate  which  you  deliver.  (See  Accounts  with 
Stocks,  page  67.) 

127.  Your  bank  reports  the  collection  of  the  draft  you  drew  in  Transaction  99.  The 
bank  deducts  collection  charges  estimated  at  the  same  rate  as  in  Transaction  76.  Receive 
credit  on  your  pass  book  for  the  proceeds  of  the  draft. 

128.  Settle  in  full  with  C.  Lambert,  giving  him  a  check  for  $100  and  a  note  at  15  days 
with  interest  at  six  per  cent  for  the  balance.  Make  these  payments  at  the  Commercial  Ex- 
change, without  taking  a  receipt. 

Compound  journal  entry. 


86   •  ADVANCED  ACCOUNTING 


129.  Sell  to  J.  R.  Stone,  210  Third  Street,  for  cash : 

5  brl.  Sweet  Potatoes  (C-2)             @  $3.50 

10  boxes  Lemons  (C-4)                     @  4.25 

10  boxes  Oranges  (C-4)                    @  3.75 

130.  Indorse  and  deposit  all  checks  on  hand  together  with  currency  as  per  price  list. 
Prove  and  balance  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  in  balance,  and  take  a  trial 
balance. 

Do  not  forget  to  post  the  proper  credits  from  the  commission  sales  ledger. 

SECTION  EIGHT 

131.  Buy  the  lot  and  warehouse  building  you  rented  in  Transaction  2,  from  the  firm 
there  named,  at  the  valuation  given  in  your  price  list,  giving  your  check  for  one-fourth  of 
the  price,  and  your  three  notes  in  equal  amounts  for  the  balance,  making  the  notes  payable  in 
10,  20,  and  30  days,  with  interest  at  the  rate  of  6  per  cent  per  annum,  and  securing  the  notes 
by  giving  a  mortgage  on  the  property  you  have  just  bought. 

See  "Real   Estate  Transfers,"  page  67,  "Warranty  Deed,"  page  68,  and  "Real  Estate  Mortgage,"  page  69. 

Office  Course.     Carry  out  this  transaction  at  Tablet    Coukse.    Take    the    deed    from    your 

the  Real  Estate  and  Insurance  Office,  or  at  the  Com-        envelope  of  Incoming  Documents,  filling  in  the  con- 
mercial  Exchange  if  the  first  named  office  is  closed.        sideration    and    location.      Deliver    the    check,    notes, 

and  mortgage  through  Outgoing  Papers. 

132.  Collect  cash  from  U.  C.  Black  for  desk  rent  in  your  warehouse,  $10,  of  which 
amount  $5  is  to  pay  for  rent  before  you  purchased  the  property  and  the  balance  is  to  pay  in 
advance  from  the  date  of  your  purchase.     Give  a  receipt  and  collect  cash  in  the  usual  manner. 

133.  Estimate  the  amount  of  Coal  and  Coke  that  will  be  required  to  fill  the  orders  in 
Letters  21  and  22,  and  order  the  same  from  your  wholesale  firm  on  the  usual  terms. 

134.  Your  bank  reports  the  collection  of  the  draft  you  drew  on  G.  E.  Anderson  in 
Transaction  116.  The  bank  deducts  collection  charges  estimated  at  same  rate  as  in  Trans- 
action 76.     Receive  credit  on  your  pass  book  for  the  proceeds. 

135.  Sell  to  D.  W.  Wells,  392  Eighth  Street,  on  account : 

7  brl.  Cranberries  (C-2)  @  $6.75 

8  brl.  Sweet  Potatoes  (C-2)  @  3.50 
.30  baskets  Grapes  (C-3)  @  .25 
15  brl.  Apples  (C-3)  @  2.75 

136.  Give  your  check  to  the  bank  to  pay  the  draft  drawn  on  you  by  your  wholesale 
firm  for  the  invoice  recorded  in  Transaction  68. 

137.  Receive  credit  on  your  pass  book  for  the  proceeds  of  the  draft  on  Carter  Bros, 
you  left  for  collection  in  Transaction  125.  The  bank  deducts  collection  charges  estimated 
as  in  Transaction  76. 

138.  The  merchandise  ordered  in  Transaction  113  should  now  be  ready  for  entry. 
Give  your  check  to  pay  the  freight  charges. 

Proceed  as  in  Transaction  21.  If  any  jerror  is  found  in  the  invoice,  report  to  the  wholesale  firm  and 
ask  for  a  memorandum  of  credit. 

139.  Enter  the  account  sales  of  the  shipment  to  your  commission  firm  in  Transaction 
92. 

140.  Fill  the  order  received  in  Letter  No.  19,  shipping  freight  unpaid  and  billing  at 
2/10  n/30. 

141.  Receive  cash  from  C.  P.  Manderson  in  payment  of  his  note  received  in  Trans- 
action 63. 

142.  Sell  to  H.  P.  Trenton  a  desk  belonging  to  your  warehouse  fixtures,  receiving 
cash  for  same,  $15,  and  giving  a  receipt. 

143.  Fill  the  order  received  in  Letter  No.  20,  shipping  freight  unpaid  and  billine  at 
2/10  n/30.  * 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  87 

144.  Receive  at  the  Commercial  Exchange  a  check  for  $52.50,  from  the  Treasurer  of 
the  Central  Commercial  Railway  Co.,  for  a  semi-annual  dividend  on  your  stock  in  that  com- 
pany. 

The  dividend  was  declared  before  the  sale  of  your  stock  in  Transaction  126. 
See  "Accounts  with  Stocks,"  page  67. 

145.  Give  your  check  to  G.  E.  Kingman  to  pay  the  note  you  gave  in  Transaction  55, 
with  interest  for  20  days  at  the  given  rate. 

146.  Receive  credit  on  your  pass  book  for  the  proceeds  of  the  draft  on  Harper  &  Son 
you  drew  in  Transaction  101.  The  bank  deducts  collection  charges  estimated  as  in  Transac- 
tion 76. 

147.  Sell  to  Bartley  &  Brown,  108  Second  Street,  on  account : 

9  brl.  Cranberries  (C-2)  @     $6.75 

7  brl.  Sweet  Potatoes  (C-2)  @       3.50 

15  boxes  Oranges  (C-4)  @       3.75 

148.  Pay  A.  R.  Stone  cash  for  drayage  on  Consignment  No.  2,  $3.25. 

149.  Debit  Consignment  No.  2  for  insurance  $1  and  for  commission  5  per  cent  of  the 

total  amount  of  their  sales.     Close  the  consignment,  sending  an  account  sales  to  Grant  &  Co., 

with  your  check  certified  at  bank  for  the  net  proceeds.     Mail  the  account  sales  and  check. 

If  there  is  no  banker  to  certify  the  check,  make  the  proper  record  of  certification  across  the  face  of  the 
check  and  take  it  to  the  teacher  for  the  teller's  signature.     (See  Certified  Checks,  page  38.) 

150.  Deposit  the  check  received  in  Transaction  144  with  currency  as  per  price  list. 
Prove  and  balance  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  iri  balance,  and  take  a  trial 

balance. 

SECTION  NINE 

151.  Give  your  check  to  the  bank  to  pay  the  draft  drawn  on  you  by  the  Chalmers  Fruit 
Co.,  for  the  proceeds  of  their  consignment  reported  in  Transaction  114. 

152.  The  merchandise  ordered  in  Transaction  133  should  now  be  ready  for  entry. 
Give  your  check  to  pay  the  freight  charges. 

Proceed  as  in  Transaction  21. 

153.  Enter  the  account  sales  of  the  shipment  you  made  to  the  commission  firm  in 
Transaction  118. 

154.  Insure  your  warehouse  purchased  in  Transaction  131  for  one-half  of  purchase 
price  of  the  property,  making  the  policy  for  one  year  and  giving  your  check  for  the  premium 
estimated  at  $1.20  per  hundred  dollars.      (Debit  Insurance.) 

Office  Course.     Carry  out  this  transaction  at  Tablet   Course.     You    will   find   the    insurance 

the  Real  Estate  and  Insurance  Office,  or  at  the  Com-  policy  in  Incoming  Documents,  and  you  will  be  re- 
mercial  Exchange,  if  the  former  is  closed.  quired    to    fill    in    the    consideration,    the   amount    of 

insurance,   and   the  .location.     Make   payment   in   the 

usual  manner. 

155.  Fill  the  order  received  in  Letter  No.  21,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent,  subject  to  sight  draft. 

156.  Draw  at  sight  for  the  invoice  in  Transaction  155  and  leave  the  draft  at  bank  for 
collection. 

157.  Buy  grain  from  C.  C.  Carter,  R.  F.  D.  No.  16,  on  account,  per  Grain  Ticket  No. 
21. 

158.  Sell  to  R.  E.  Sherwood,  227  Fourth  Avenue,  on  account : 

20  brl.  Apples  (C-3)  @     $2.75 

50  baskets  Grapes  (C-3)  @         .25 

15  boxes  Lemons  (C-4)  @       4.25 

159.  Receive  cash  from  the  Central  Coal  Co.,  in  payment  of  their  first  note  for  $300 
with  interest  for  6  days  at  the  given  rate. 

160.  Fill  the  order  received  in  Letter  No.  22,  shipping  freight  unpaid  and  billing  at  a 
discount  of  two  per  cent,  subject  to  sight  draft. 

161.  Draw  at  sight  for  the  invoice  in  Transaction  160  and  leave  the  draft  at  bank  for 
collection. 


ADVANCED  ACCOUNTING 


162.  Enter  memorandum  of  credit  received  from  your  wholesale  firm  to  correct  over- 
charge in  invoice  received  in  Transaction  138. 

Enter  in  the  journal,  as  this  does  not  represent  a  sale  of  merchandise. 

163.  Telegraph  to  your  wholesale  office  for  the  Coal  or  Coke  ordered  in  telegram 
(Letter  No.  23).  Instruct  the  wholesale  office  to  ship  to  the  address  of  the  firm  ordering 
from  you,  freight  unpaid,  and  bill  to  you  on  the  usual  terms.  Pay  cash  75  cents  to  the  Com- 
mercial Exchange  for  sending  the  message,  and  deliver  the  message  to  the  teacher. 

Read  Telegraphing,  page  66,  and  use  as  few  words  as  possible  in  writing  your  message. 

164.  Sell  to  Bartley  &  Brown,  108  Second  Street,  on  account : 

30  brl.  Apples  (C-3)  @     $2.75 

60  baskets  Grapes  (C-3)  @         .25 

165.  Deduct  the  discount  offered  in  the  invoice  received  in  Transaction  86,  and  send 
the  wholesale  firm  your  certified  check  for  the  net  proceeds  of  the  invoice. 

Proceed  as  in  Transaction  94. 

Have  the  check  certified  as  in  Transaction  149. 

166.  Buy  grain  from  E.  M.  Powers,  R.  F.  D.  No.  19,  per  Grain  Ticket  No.  22,  on  ac- 
count. 

167.  Receive  credit  on  your  pass  book  for  the  proceeds  of  the  draft  on  J.  C.  Daniels 
you  drew  in  Transaction  105.  The  bank  deducts  collection  charges  estimated  as  in  Trans- 
action 76. 

168.  Buy  grain  from  H.  C.  Preston,  R.  F.  D.  No.  4,  per  Grain  Ticket  No.  23,  giving 
your  check  in  payment. 

The  student  will  complete  this  ticket  by  filling  in  the  weights  as  given  on  his  price  list. 

169.  Ship  all  grain  you  have  on  hand,  of  the  variety  purchased  in  Transaction  168,  to 
your  commission  firm  for  sale  on  commission,  prepaying  the  freight  by  check. 

Complete  Grain  Ticket  No.  24,  writing  the  total  purchases  on  Grain  Tickets  21,  22,  and  23,  less  75  lb. 
for  screening. 

Proceed  as  in  Transaction  18. 

170.  Deposit  cash  in  bank  as  per  price  list. 
Prove  and  balance  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  in  balance,  and  take  a  trial  bal- 
ance. 

SECTION  TEN 

171.  Collect  cash  from  the  B.  C.  Railway   for   overcharge   on   freight  in  Transaction 

138,  giving  a  receipt. 

Office    Course.     Receive    the    cash    from    the  Tablet  Course.     Receive  the  cash   from  Corn- 

freight  agent.  munity  Cash  envelope. 

172.  Pay  cash  to  A.  R.  Stone  for  drayage  on  Consignment  No.  3,  $3.50.     No  receipt. 

173.  Enter  the  invoice  from  your  wholesale  firm  in  response  to  your  telegram  order  in 
Transaction  163. 

174.  Send  invoice  to  the  firm  that  ordered  by  telegraph  in  Letter  No.  23,  billing  at 
2/10  n/30.  As  this  merchandise  was  sent  direct  from  Central  City,  freight  unpaid,  estimate 
the  freight  charges  from  Central  City  to  your  city,  which  you  would  have  paid  if  the  mer- 
chandise had  been  shipped  to  you,  and  deduct  this  amount  from  your  invoice. 

175.  Make  a  statement  of  account  for  R.  E.  Sherwood  and  collect  cash  from  him  for 
the  amount  due,  receipting  the  statement. 

See  Statements  of  Account,  Form  No.  4,  page  52. 

176.  Give  your  check  to  H.  C.  Preston  to  pay  his  account  in  full. 

Write  on  the  lower  margin  of  the  check  to  the  left  of  your  signature,  "In  full  of  account,"  and  no  re- 
ceipt will  be  required. 

177.  Receive  credit  on  your  pass  book  for  the  proceeds  of  your  draft  on  Carter  Bros., 
drawn  in  Transaction  161.     The  bank  deducts  collection  charges  as  in  Transaction  76. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  89 

178.  Allow  E.  L.  Jackson  &  Co.  a  discount  credit  of  2  per  cent  on  their  entire  account, 
including  the  invoice  sent  in  Transaction  174  which  should  be  posted  at  once.  Mail  a  state- 
ment of  their  account,  which  should  include  the  discount  credit,  giving  notice  of  draft  that 
you  will  draw  for  the  net  amount. 

Proceed  as  in  Transaction  98. 

179.  Draw  on  E.  L.  Jackson  &  Co.  at  sight  as  per  notice  in  Transaction  178,  and  leave 
the  draft  at  bank  for  collection. 

180.  Receive  cash  from  the  Central  Coal  Co.  in  payment  of  their  second  note  for  $300 
with  interest  for  10  days  at  the  given  rate. 

181.  Draw  on  your  commission  firm  at  sight  for  the  net  proceeds  debited  in  Transac- 
tion 139.  Deposit  the  proceeds  of  this  draft  after  deducting  a  discount  of  one-half  of  one 
per  cent. 

Proceed  as  in  Transaction  70. 

182.  Debit  Consignment  No.  3  for  insurance  60  cents,  and  for  commission  5  per  cent 
of  the  amount  of  the  sales  (not  including  freight  refund.)  Close  the  consignment,  sending 
an  account  sales  and  a  certified  check  for  the  net  proceeds. 

Proceed  as  in  Transaction  149. 

183.  Allow  J.  C.  Daniels  a  discount  credit  of  2  per  cent  on  the  bill  sent  him  in,  Trans- 
action 69.  Mail  a  statement  of  his  account,  which  should  include  the  discount  credit,  giving 
notice  of  draft  that  you  will  draw  for  collection. 

Proceed  as  in  Transaction  98. 

184.  Draw  on  J.  C.  Daniels  at  sight  as  per  notice  in  Transaction  183,  and  leave  the 
draft  at  bank  for  collection. 

185.  Give  your  check  to  C.  Lambert  to  pay  the  note  you  gave  in  Transaction  128,  with 
interest  for  15  days  at  the  given  rate. 

186.  Sell  to  R.  E.  Sumner  5  shares  of  your  Central  Commercial  Railway  stock  at  105, 
receiving  cash  for  same. 

Proceed  as  in  Transaction  126. 

187.  Render  statement  of  account  to  Bartley  &  Brown  and  collect  cash  for  balance 
due,  receipting  the  statement. 

188.  Receive  credit  on  your  pass  book  for  the  proceeds  of  your  draft  on  E.  C.  Harper 
&  Son  in  Transaction  156.     The  bank  deducts  collection  charges  as  in  Transaction  76. 

189.  Sell  to  Simmons  &  Co.,  122  Second  Street,  on  account: 

20  boxes  Lemons  (C-4)  @     $4.25 

30  boxes  Oranges  (C-4)  @       3.75 

190.  Deduct  the  discount  offered  in  the  invoice  received  in  Transaction  138  less  the 
memorandum  of  credit  for  overcharge  on  this  invoice  and  send  the  wholesale  firm  a  check 
for  the  proceeds  of  the  invoice  after  discount. 

191.  Mail  statement  of  account  to  R.  C.  Smith  &  Co.,  giving  notice  that  you  will  draw 
on  them  at  sight  for  collection. 

192.  Draw  on  R.  C.  Smith  &  Co.  at  sight  as  per  notice  in  Transaction  191,  and  leave 
the  draft  at  bank  for  collection. 

193.  Render  statement  of  account  to  J.  R.  Stone,  collecting  cash  for  balance  due  and 
receipting  the  statement. 

194.  Give  your  check  to  pay  the  first  note  you  gave  for  real  estate  in  Transaction  131 

with  interest  for  10  days  at  the  given  rate. 

This  check  overdraws  your  bank  account,  but  you  have  cash  to  deposit  that  will  make  your  account 
good  before  all  checks  reach  your  bank. 

195.  Allow  C.  I.  Emerson  a  discount  credit  of  2  per  cent  on  his  entire  account.  Mail 
a  statement  of  his  account  including  the  discount  credit  and  giving  notice  of  draft  that  you 
will  draw  for  collection. 

Proceed  as  in  Transaction  98. 


90  ADVANCED  ACCOUNTING 


196.  Draw  on  C.  I.  Emerson  at  sight  as  per  notice  in  Transaction  195,  and  leave  the 
draft  at  bank  for  collection. 

197.  Sell  to  Hart  Bros./ 216  First  Avenue,  on  account: 

25  boxes  Lemons  (C-4)  @     $4.25 

20  boxes  Oranges  (C-4)  @       3.75 

198.  Render  statement  of  account  to  D.  W.  Wells,  and  collect  cash  in  full  of  account, 
receipting  the  statement. 

199.  Deposit  cash  in  bank,  as  per  price  list. 

200.  Give  your  check  to  C.  C.  Carter  to  pay  his  account  in  full. 

Proceed  as  in  Transaction  176. 

Prove  and  balance  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  in  balance,  and  take  a  trial  bal- 
ance. 

SECTION  ELEVEN 

201.  Enter  the  account  sales  of  the  shipment  you  made  to  the  commission  firm  in 
Transaction  169. 

202.  Sell  the  balance  of  your  Central  Commercial  Railway  stock  to  A.  T.  Cooper  at 
109  for  cash. 

Proceed  as  in  Transaction  126. 

203.  Give  E.  M.  Powers  your  check  in  full  of  account. 

204.  Receive  credit  on  your  pass  book  for  the  proceeds  of  your  draft  on  R.  C.  Smith 
&  Co.  in  Transaction  192.     The  bank  deducts  collection  charges  as  in  Transaction  76. 

205.  Render  statement  of  account  to  Simmons  &  Co.,  and  collect  cash  in  full  of  ac- 
count, receipting  the  statement. 

206.  Pay  cash  to  A.  R.  Stone  for  drayage  on  Consignment  No.  4,  $6.     No  receipt. 

207.  Draw  on  your  commission  firm  at  sight  for  the  net  proceeds  credited  in  Trans- 
action 153.  Deposit  the  proceeds  of  this  draft  after  deducting  a  discount  of  one-half  of  one 
per  cent. 

Proceed  as  in  Transaction  70. 

208.  Deduct  the  discount  offered  in  the  invoice  received  in  Transaction  152,  and  send 
your  wholesale  firm  a  check  for  the  net  proceeds  of  the  invoice. 

Proceed  as  in  Transaction  94. 

209.  Receive  credit  on  your  pass  book  for  the  proceeds  of  your  draft  on  E.  L.  Jackson 
&  Co.  in  Transaction  179.     The  bank  deducts  collection  charges  as  in  Transaction  76. 

210.  Debit  Consignment  No.  4  for  insurance  $1.20,  and  for  commission  5  per  cent  of 
the  amount  of  the  sales.  Close  the  consignment  and  send  an  account  sales  and  a  certified 
check  for  the  net  proceeds. 

Proceed  as  in  Transaction  149. 

211.  Render  statement  of  account  to  Hart  Bros,  and  collect  cash  for  balance  due,  re- 
ceipting the  statement. 

212.  Receive  cash  from  the  Central  Coal  Co.  in  payment  of  their  third  note  for  $300 
with  interest  for  15  days  at  the  given  rate. 

213.  Allow  M.  V.  Barlow  a  discount  credit  of  2  per  cent  on  his  entire  account.  Render 
a  statement  of  his  account  including  the  discount  credit  and  notify  him  that  you  will  draw  at 
sight  for  the  net  amount  due. 

Proceed  as  in  Transaction  98. 

214.  Draw  on  M.  V.  Barlow  at  sight  as  per  notice  in  Transaction  213,  and  discount 
the  draft  at  bank  at  the  rate  of  one-half  of  one  per  cent,  depositing  the  proceeds. 

Proceed  as  in  Transaction  70. 

215.  Deduct  the  discount  offered  in  the  invoice  received  in  Transaction  173,  and  send 
your  wholesale  firm  a  check  for  the  net  proceeds  of  the  invoice. 

Proceed  as  in  Transaction  94. 

216.  Receive  credit  on  your  pass  book  for  the  proceeds  of  your  draft  on  J.  C.  Daniels 
in  Transaction  184.    The  bank  deducts  collection  charges  as  in  Transaction  76. 


BUSINESS  PRACTICE  IN  JOBBING  AND  COMMISSION  91 

217.  Sell  your  lot  and  warehouse  building  to  the  firm  and  at  the  price  named  in  your 
price  list,  receiving  cash  $1000  and  his  note  at  six  months  with  interest  at  5  per  cent  for  the 
balance.  Deliver  a  warranty  deed  and  draw  up  a  mortgage  for  the  purchasing  firm  to  sign, 
securing  the  payment  of  the  note. 

Office  Course.     Carry  out  this  transaction   at  Tablet  Course.     Receive  the  cash   from  Com- 

the  Real  Estate  and  Insurance  Office,  where  the  note        munity   Cash.     Deliver  the  deed  to  the  teacher  and 
and  mortgage  will  be  signed.  request  him  to  sign  the  note  and  mortgage   for  the 

purchasing  firm. 

218.  Sell  your  warehouse  fixtures  to  the  firm  that  purchased  the  warehouse  at  the  price 
named  in  your  price  list.    Deliver  a  bill  of  sale  at  the  Commercial  Exchange  and  collect  cash. 

See  Bill  of  Sale,  page  71. 

219.  Receive  credit  on  your  pass  book  for  the  proceeds  of  your  draft  on  C.  I.  Emerson 
in  Transaction  196.     The  bank  deducts  collection  charges  as  in  Transaction  76. 

220.  Give  your  check  to  pay  the  remaining  two  notes  you  gave  for  real  estate  in  Trans- 
action 131,  with  interest  for  20  days  at  the  given  rate. 

One  of  these  notes  is  not  due,  but  the  firm  consents  to  payment  with  interest  to  date. 

Office   Course.     Call   for  a   Release   of   Mort-  Tablet   Course.     Receive   a   Release   of   Mort- 

gage at  the  Real  Estate  and  Insurance  Office.  gage  through   Incoming  Letters  and  Documents. 

See  Release  of  Mortgage,  page  70. 

221.  Draw  on  your  commission  firm  at  sight  for  the  net  proceeds  entered  in  Trans- 
action 201.  Deposit  the  proceeds  of  this  draft  after  deducting  a  discount  of  one-half  of  one 
per  cent. 

Proceed  as  in  Transaction  70. 

222.  Credit  Real  Estate  for  the  use  of  the  warehouse,  three-fifths  of  a  month  at  the 
rate  paid  for  rent  in  Transaction  3. 

223.  Discount  at  bank  the  note  you  received  in  Transaction  217,  estimating  interest  to 
maturity  at  the  given  rate.  Discount  the  amount,  face  and  interest,  for  the  same  period  at 
the  rate  of  6  per  cent  per  annum,  and  deposit  the  proceeds.  Assign  the  mortgage  to  the  bank 
which  you  received  with  above  note  in  Transaction  217. 

See  Discount  Tickets,  page  40. 

224.  Pay  cash  for  bookkeeper's  salary,  $25. 

225.  Draw  a  check  in  your  own  favor  for  $100,  also  a  check  favor  A.  H.  Norton  for 
$100  in  payment  of  estimated  salaries  to  date. 

Proceed  as  in  Transaction  85,  having  these  checks  certified. 

226.  Pay  cash  for  shipping  clerk's  salary,  $12. 

227.  Assign  your  insurance  policy  received  in  Transaction  154,  to  the  firm  that  pur- 
chased the  warehouse  and  collect  cash  for  three-fourths  of  the  premium,  giving  a  receipt  for 
same. 

228.  As  you  are  about  to  dissolve  partnership,  prepare  a  Notice  of  Dissolution  of 
Partnership  for  publication  in  the  "School  News,"  and  hand  the  same  to  your  teacher.  Pay 
cash  in  the  usual  manner  for  the  publication,  $2.50,  and  for  previous  advertising,  $5,  mak- 
ing a  total  of  $7.50,  taking  a  receipt. 

See  Dissolution  of  Partnership,  page  72. 

229.  Deposit  all  cash  on  hand. 
Prove  and  balance  cash. 

Post  your  ledger,  rule  up  all  personal  accounts  that  are  in  balance,  and  take  a  trial  bal- 
ance. 

230.  Make  a  balance  sheet,  without  inventories,  and  close  your  ledger,  giving  each 
partner  credit  for  his  share  of  the  net  gain. 

231.  Write  a  check  to  each  partner  for  his  present  investment,  and  dispose  of  the 
checks  as  in  Transaction  85,  having  them  certified. 

Indorse  and  pass  to  the  teacher  your  three  certified  checks. 

Call  for  your  bank  statement  and  paid  checks  and  verify  the  same.  Follow  the  direc- 
tions given  at  the  close  of  Section  Five  regarding  the  verification  and  filing  of  cancelled 
checks. 


92  ADVANCED  ACCOUNTING 


QUESTIONS  FOR  REVIEW 

1.  What  is  a  receipt?     When  should  it  be  required? 

2.  What  is  the  purpose  of  the  signature  card  in  banking? 

3.  What  is  the  purpose  of  the  deposit  ticket? 

4.  How  is  the  bank  pass  book  used  ? 

5.  What  is  the  purpose  of  the  bank  check? 

6.  What  three  parties  are  related  to  a  bank  check? 

7.  How  is  the  bank  balance  kept  in  the  check  book  ? 

8.  What  are  indorsements  on  business  papers? 

9.  How  and  when  should  bank  checks  be  indorsed? 

10.  What  is  the  purpose  of  a  depositor's  statement? 

11.  What  is  the  process  of  certifying  a  bank  check,  and  what  is  its  value? 

12.  What  three  parties  are  related  to  a  bank  draft? 

13.  What  is  the  purpose  of  a  bank  draft? 

14.  What  is  the  purpose  of  a  certificate  of  deposit? 

15.  What  is  the  difference  between  sight  drafts  and  time  drafts? 

16.  What  is  the  process  of  accepting  a  draft,  and  what  is  its  purpose  ? 

17.  What  is  the  purpose  of  a  lease? 

18.  What  bills  are  usually  written  in  connection  with  property  that  is  delivered  to  a 
transportation  company  for  shipment? 

19.  What  papers  are  usually  prepared  at  the  transportation  office  in  connection  with 
property  to  be  delivered? 

20.  What  steps  should  be  taken  in  verifying  an  invoice? 

21.  What  is  understood  by  trade  discounts? 

22.  How  are  the  terms  of  a  sale  usually  expressed? 

23.  What  is  a  memorandum  of  credit  ? 

24.  What  is  a  statement  of  account,  and  to  what  extent  is  it  used? 

25.  What  is  an  invoice  of  shipment? 

26.  What  is  a  conignor's  expense  bill? 

27.  What  is  an  account  sales? 

28.  What  special  columns  will  be  required  in  the  sales  book,  if  a  part  of  the  goods  are 
sold  on  commission? 

29.  What  two  forms  are  used  for  keeping  accounts  with  consignments? 

30.  In  what  book  may  we  record  memoranda  of  our  contracts  and  agreements  ? 

31.  What  are  included  in  the  term  Stocks? 

32.  How  are  the  ownership  and  title  of  real  estate  shown? 

33.  When  should  a  release  of  mortgage  be  used  ? 

34.  What  is  a  bill  of  sale? 

35.  What  papers  should  be  drawn  in  case  of  the  formation  of  a  partnership? 

36.  What  notices  should  be  sent,  in  case  of  a  dissolution  of  partnership? 


SET  SEVEN. 

Special  Column  Books. 


The  following  set  has  been  prepared  to  present  in  a  practical  manner  the  general  rou- 
tine of  a  wholesale  dealer,  and  to  illustrate  the  use  of  each  book  as  a  book  of  original  entry, 
from  which  debits  and  credits  are  posted  to  the  side  ledgers  and  the  general  ledger.  We 
will  briefly  describe  the  books  used,  and  the  process  of  posting  from  each  one  to  the  ledgers. 

If  loose  leaf  blanks  are  used,  the  student  should  place  sheets  in  binders  as  follows : 

In  Journal  Notes  and  Cash  Book,  one  sheet  special  printed  Journal,  one  sheet  Bills 
Payable  and  Receivable,  three  sheets  special  printed  Cash  Book. 

In  Purchase  and  Sales  Book,  one  sheet  special  printed  Purchase  Journal,  two  sheets 
special  printed  Sales  Journal. 

In  Ledgers  and  Trial  Balances,  two  sheets  two  account  General  Ledger  with  index  sheet, 
one  sheet  two  account  Purchase  Ledger  with  index  sheet,  two  sheets  two  account  Sales 
Ledger  with  index  sheet,  two  sheets  Journal  ruling  for  trial  balance  on  same  card  with  one 
sheet  six-column  ruling  for  Balance  Sheets. 

THE  SPECIAL  COLUMN  JOURNAL 

The  Journal  is  used  for  the  opening  entries  and  for  such  other  entries  as  cannot  be  fully 
recorded  in  the  other  books.  Besides  the  regular  debit  and  credit  columns,  two  special  col- 
umns are  arranged  for  occasional  entries  that  relate  to  the  purchase  ledger  and  sales  ledger. 

If  a  customer  belonging  to  our  sales  ledger  gives  us  a  note  or  any  other  thing  of  value 
except  cash  to  apply  on  his  account,  we  would  enter  the  transaction  in  the  journal,  debiting 
the  proper  title  and  extending  the  credit  amount  to  "Sales  Ledger  Cr."  column.  If  we  give 
a  note  or  any  other  thing  of  value  except  cash  for  credit  to  a  firm  belonging  to  our  pur- 
chase ledger,  we  would  journalize  the  transaction,  extending  the  debit  amount  to  "Purchase 
Ledger  Dr."  column,  and  crediting  the  proper  title. 

Merchandise  returned  to  us  by  any  of  our  customers  or  allowances  made  by  us  to  them 
on  account,  would  be  journalized,  debiting  "Mdse."  and  extending  the  credit  to  "Sales 
Ledger  Cr."  column.  Credits  to  us  for  merchandise  returned  or  other  allowances  to  us  by 
firms  belonging  to  our  purchase  ledger,  should  be  extended  to  the  "Purchase  Ledger  Dr." 
column,  and  credited  to  "Mdse." 

Before  posting  from  the  journal,  the  special  columns  should  be  added  and  their  totals 

should  be  carried  to  the  general  columns,  as  in  the  model  page  of  the  journal  under  date  of 

Nov.  3. 

THE  SPECIAL  COLUMN  CASH  BOOK 

The  cash  book  may  have  any  number  of  special  columns,  in  order  to  group  entries  of  the 
same  kind  and  avoid  so  many  postings  to  the  ledger.  In  this  set  we  have  arranged  for  four 
money  columns  on  the  debit  side,  and  five  on  the  credit  side. 

Cash  received  from  a  firm  belonging  to  the  sales  ledger,  will  be  extended  to  "Sales  Led- 
ger Cr."  column.  If  the  firm  deducts  a  cash  discount,  as  in  the  case  of  James  Lee  (sixth 
entry),  the  amount  of  discount  is  extended  to  "Mdse.  Dis.  Dr."  column,  and  the  full  amount 
of  his  invoice  to  "Sales  Ledger  Cr.''  column.  In  a  business  where  frequent  discounts  are  al- 
lowed on  merchandise  purchases  and  sales,  the  title  "Merchandise  Discount"  should  be  used 
for  such  discounts.  Interest  paid  or  received  on  notes  or  discounts  allowed  on  notes  and 
drafts,  should  be  classed  as  "Interest  and  Discount."  Cash  received  for  sundry  small  sales 
not  entered  in  the  sales  journal,  will  be  extended  to  "Mdse.  Cr."  column.  Cash  received  from 
other  sources  than  sales  of  merchandise  and  sales  ledger  accounts,  should  be  extended  to 
"General"  column. 

Cash  paid  to  a  firm  belonging  to  the  purchase  ledger,  should  be  extended  to  "Purchase 
Ledger  Dr."  column,  the  amount  of  the  bill  before  discount  being  used.  If  any  discount  is 
deducted,  it  should  be  extended  to  "Mdse.  Dis.  Cr."  column.     Cash  paid  for  expense  items 

—93- 


94  ADVANCED  ACCOUNTING 


should  be  extended  to  "Expense  Dr."  column.  Cash  paid  for  merchandise  not  entered  in  the 
purchase  book,  such  as  freight  and  drayage  charges,  should  be  extended  to  "Mdse.  Dr."  col- 
umn.    Other  cash  payments  should  be  extended  to  "General"  column. 

Before  balancing  cash  and  posting,  the  totals  of  the  special  columns  should  be  carried 
into  the  general  columns.  The  total  of  "Mdse.  Dis.  Dr."  should  be  carried  to  the  credit  side 
of  Cash  in  the  general  column,  with  the  explanation  "Contra  total.''  The  total  of  "Mdse. 
Dis.  Cr."  should  be  carried  to  the  debit  side  of  Cash  in  the  general  column,  with  the  ex- 
planation "Contra  total."  The  cash  balance  will  then  appear  in  the  general  column.  (The 
cash  book  is  illustrated  on  pages  98  and  99.) 

THE  PURCHASE  JOURNAL 

In  a  business  where  there  are  many  purchases  of  merchandise,  it  saves  work  to  record 
them  in  a  separate  book,  called  a  "Purchase  Journal"  (also  called  an  "Invoice  Book").  If 
an  invoice  or  bill  accompanies  tke  goods,  the  purchase  is  not  itemized  in  the  purchase  book : 
as  the  filing  of  the  itemized  invoice  will  be  a  sufficient  record  of  the  items  and  prices. 

A  purchase  journal  may  be  kept  with  regular  journal  rulings;  but  business  men  who 
watch  discount  offers  and  maturities  of  their  bills,  require  special  columns  in  the  purchase 
journal,  showing  when  bills  must  be  paid  in  order  to  claim  the  cash  discount  offered,  and 
how  much  must  be  paid  after  deducting  the  discount.  The  total  of  the  face  amount  of  the 
bills  is  carried  to  the  general  ledger  to  the  debit  of  "Merchandise"  and  the  credit  of  "Pur- 
chase Ledger."  The  amounts  in  the  other  columns  of  the  purchase  journal  are  merely  mem- 
orandum entries  for  reference,  and  are  not  posted.  If  a  purchase  is  not  accompanied  by  an 
invoice  and  requires  itemizing  in  the  purchase  journal,  the  items  and  prices  can  be  entered 
in  "Remarks"  column. 

THE  SALES  JOURNAL 

Bills  or  invoices  for  sales  at  wholesale  should  be  copied  in  the  Sales  Book.  The  copies 
may  be  written,  or,  if  copying  ink  is  used,  may  be  taken  in  an  impression  book.  Duplicate 
bills  may  also  be  secured  by  taking  carbon  copies.  In  the  present  set,  it  is  assumed  that  the 
entries  in  the  Sales  Journal  are  taken  from  carbon  duplicates  which  need  not  be  prepared 
by  the  student.     His  entries  should  be  made  as  illustrated  on  page  97. 

If  a  cash  sale  of  sundry  small  items  is  made  without  billing,  it  will  not  appear  in  the 
duplicate  sales  book,  and  hence  will  not  be  recorded  in  the  sales  journal.  In  such  case  it  will 
be  entered  only  in  the  cash  book,  the  amount  being  extended  to  "Mdse.  Cr."  column. 

If  a  discount  is  given  on  the  sale  at  the  time  the  sale  is  made,  the  discount  should  be  de- 
ducted before  the  amount  of  the  sale  is  extended  to  the  amount  column  in  the  bill.  If  a 
discount  is  offered,  conditional"  upon  payment  being  made  at  a  specified  time,  a  memorandum 
of  the  discount  offer  will  be  made  in  the  space  for  "Terms,"  but  no  discount  should  be  de- 
ducted from  the  bill  when  it  is  delivered  to  the  buyer. 

The  total  of  the  Sales  Ledger  column  in  the  sales  journal  for  each  posting  period  is 
posted  to  the  general  ledger  to  the  debit  of  "Sales  Ledger,"  and  the  credit  of  "Merchandise." 
The  sales  journal  is  illustrated  on  page  97,  the  entry  in  the  "Remarks''  column  of  the  first 
sale,  2/10  n/30,  means  a  discount  of  two  per  cent  is  offered  if  the  bill  is  paid  in  ten  days,  the 
bill  being  due  without  discount  in  thirty  days. 

THE  BILL  BOOK 

The  bill  book  in  this  set  will  be  kept  merely  as  an  auxiliary  book  for  itemizing  bills  re- 
ceivable and  payable,  the  debits  and  credits  being  carried  through  the  journal. 

SIDE  LEDGERS 

In  a  business  of  any  considerable  magnitude  it  is  convenient  to  divide  the  ledger  into 
departments,  instead  of  having  all  accounts  in  one  book.  This  plan  is  well  illustrated  in  the 
present  business  by  having  two  side  ledgers  for  special  classes  of  accounts,  and  a  general 
ledger  that  exhibits  the  general  condition  and  success  of  the  business.  If  there  are  many  ac- 
counts with  customers,  it  is  convenient  to  group  such  accounts  in  one  ledger  called  a  "Sales 
Ledger."  If  we  have  a  considerable  number  of  creditors  whom  we  owe  for  purchases  on  ac- 
count, it  is  convenient  to  have  a  "Purchase  Le 'leer"  for  such  accounts. 


SPECIAL  COLUMN  BOOKS 


95 


One  account  may  be  kept  in  the  general  ledger,  showing  the  total  debits  and  credits 
that  are  carried  monthly  to  the  sales  ledger,  and  another  account  showing  the  total  debits 
and  credits  that  are  carried  to  the  purchase  ledger,  and  thus  the  proprietor  may  ascertain  the 
general  condition  of  his  business  by  a  glance  at  the  limited  number  of  accounts  in  his  general 
ledger,  even  when  there  may  be  hundreds  of  open  accounts  in  his  side  ledgers. 

THE  SALES  LEDGER 

In  posting  to  the  sales  ledger,  each  customer  will  be  debited  with  the  amount  of  his 
purchases,  as  recorded  in  the  sales  journal,  and  credited  with  cash  or  notes  received  from 
him  and  other  allowances,  as  recorded  in  the  cash  book  and  journal. 

According  to  the  best  usage  of  wholesale  merchants,  every  regular  customer  is  given  an 
account  in  the  sales  ledger,  even  if  he  buys  for  cash.  He  will  be  debited  with  the  net 
amount  of  each  sale  and  credited  with  the  cash  received,  in  order  to  show  the  merchant  the 
volume  of  sales  to  each  customer  during  the  year.  Such  information  is  worth  far  more  to 
the  merchant  than  the  cost  of  the  extra  labor  of  posting  the  debits  and  credits  of  cash  cus- 
tomers. If  the  firm  buying  for  cash  is  a  transient  customer,  he  would  not  have  an  account 
in  the  sales  ledger.  His  entry,  if  in  the  sales  journal,  would  be  checked  ( V  )  and  the  corres- 
ponding entry  in  the  cash  book  would  also  be  checked,  indicating  that  neither  entry  should 
be  posted  to  the  sales  ledger. 

If  frequent  sales  are  made  to  firms  who  do  not  have  regular  ledger  accounts,  and  the 
goods  are  sent  out  C.  O.  D.,  it  is  advisable  to  group  such  entries  in  the  sales  ledger  under 
the  title  "C.  O.  D.  Accounts."  A  line  is  reserved  for  each  sale,  the  date,  the  name  of  the 
firm  to  whom  the  sale  is  made,  the  folio  of  the  sales  book,  and  the  net  amount  of  the  sale 
being  recorded  on  the  debit  side,  the  same  line  on  the  credit  side  being  reserved  for  re- 
cording the  payment  of  the  bill.  If  payment  is  made  in  two  or  more  installments,  they  will 
be  entered  in  one  line  as  illustrated  in  the  following  account,  the  initial  of  the  book  and  the 
pages  being  given  over  the  date  and  amount  of  each  posted  payment. 

C.  O.  D.  ACCOUNTS 


190- 
Nov. 


C.  E.  Horton,  Galesburg 
J.  A.  Strong,  Monmouth 


190- 

2 

126 

72 

Nov. 

3 

3 

154 

69 

C-12 


C— 12 


!2'   $40-^  $86.72 

C-12 
^  $45 


12 


126 


72 


THE  PURCHASE  LEDGER 

In  posting  to  the  purchase  ledger,  each  firm  is  credited  with  the  face  amount  of  the 
purchases  from  him,  as  recorded  in  the  purchase  journal,  and  debited  with  cash,  notes,  and 
other  allowances  given  him,  as  recorded  in  the  cash  book  and  journal. 

THE  GENERAL  LEDGER 

The  accounts  in  the  general  ledger  are  posted  from  the  journal,  cash  book,  sales  book, 
and  purchase  book.  From  the  journal  and  cash  book,  all  debits  and  credits  are  posted  that 
are  extended  to  the  general  columns.  From  the  sales  journal,  the  total  of  the  sales  for  the 
given  period  are  posted  to  the  debit  of  "Sales  Ledger,"  and  the  credit  of  "Merchandise." 
From  the  purchase  journal  the  total  of  the  purchases  for  the  given  period  are  posted  to  the 
debit  of  "Merchandise,"  and  the  credit  of  "Purchase  Ledger." 

TRIAL  BALANCES 

A  trial  balance  of  the  general  ledger  and  cash  balance  can  be  taken  at  any  time  with- 
out referring  to  the  side  ledgers.  The  accounts  in  the  sales  ledger  are  proven  correct  by 
making  a  trial  balance  or  a  list  of  the  balances.  The  sales  ledger  will  not  be  in  balance  un- 
less all  accounts  are  closed,  but  the  excess  of  the  debit  balances  of  the  sales  ledger  will  equal 
the  debit  excess  of  "Sales  Ledger"  account  in  the  general  ledger.  The  accounts  in  the  pur- 
chase ledger  may  be  tested  in  the  same  manner ;  the  excess  of  the  credit  balances  of  the  pur- 
chase ledger  will  equal  the  credit  excess  of  "Purchase  Ledger"  account  in  the  general  ledger. 


96 


ADVANCED  ACCOUNTING 


A  PAGE  OF  THE  JOURNAL 


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SPECIAL  COLUMN  BOOKS 


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SALES  JOURNAL-OPENING  AND  FIRST  CLOSING  ENTRIES 


Date 

o 

NAME 

ADDRESS 

Sales 
Ledger 

General 
Ledger 

<u   • 
•to 

Remarks 

19  - 

Nov. 

1 

James  Lee 

Vinton       , 

9494 

2/10  n/30 

Kingman  &  Co. 

Toledo 

98  54 

2/10  n/30 

E.  M.  Bundy 

Deerfield 

131 

25 

Paid 

3 

*         *         *         * 

CO.  D.—J.  A.  Strong 
Emerson  &  Hatch 
Smith  &  Lee 
Sales  Ledger  Dr. 

*         *         *         * 
Monmouth 
Brownsville 
City 
Mdse.  Cr. 

154 

132 

55 

69 
66 
23 

Paid  $45 
Bal.  C.  O.  D. 

5/10  n/30 

Acct. 

1745 

80 

MEMORANDA  ♦ 

NOVEMBER  1,  19- 

C.  A.  Carpenter  and  the  student  have  formed  a  partnership  as  wholesale  dealers  in  gro- 
ceries, under  the  firm  name  of  C.  A.  Carpenter  &  Co.  Each  partner  is  to  receive  a  salary 
of  $100  per  month,  after  which  the  net  gain  or  loss  is  to  be  shared  by  each  according  to  his 
average  investment. 

C.  A.  Carpenter  invests  a  stock  of  merchandise  inventoried  at  $5160.25,  and  cash 
$839.75. 

The  student  invests  cash,  $1500. 

Paid  cash  $250  for  one  month's  rent  of  store  building,  with  the  privilege  of  re-renting 
office  rooms  on  third  floor. 

Received  an  invoice  from  Kephart  &  Co.,  Philadelphia,  dated  October  28th,  amounting 
to  $501.50,  on  account  for  60  days,  with  a  discount  offer  of  iy2  per  cent,  if  paid  within  10 
days. 

Paid  cash  $55  for  freight  and  drayage  on  above  invoice. 

Received  an  invoice  from  Grant,  Kennedy  &  Co.,  New  York,  dated  Oct.  27th,  amount- 
ing to  $1459.74,  bought  on  account  for  30  days,  with  a  discount  offer  of  2  per  cent  if  paid  in 
15  days. 

Paid  cash  $39.30  for  freight  and  drayage  on  above  invoice. 

The  following  carbon  duplicates  of  sales  are  reported  for  entry  in  the  sales  journal,  the 
names  and  addresses  of  the  buyers,  terms  of  sale,  and  the  amounts  being  given : 

James  Lee,  Vinton,  2  per  cent  discount  10  days,  net  30  days,  $94.94. 

Kingman  &  Co.,  Toledo,  2  per  cent  discount  10  days,  net  30  days,  $98.54. 

E.  M.  Bundy,  Deerfield,  net  cash,  $131.25,  paid. 

E.  C.  Martin,  City,  net  on  account,  $55. 

Paid  cash  for  letter  circulars  for  advertising  the  new  firm,  $6.25. 


Received  cash  from  Ray  Turner,  $50,  to  apply  on  the  sale  that  will  be  reported  in  the 
carbon  duplicate  of  sales. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $22.50. 

Received  cash  from  James  Lee,  to  pay  yesterday's  invoice  after  deducting  the  cash 
discount  we  offered. 

Received  an  invoice  of  flour,  etc.,  from  A.  C.  Furlong  &  Co.,  Chicago,  dated  Oct.  29th, 
amounting  to  $631.25,  bought  on  account  30  days,  with  a  discount  offer  of  iy2  per  cent  if 
paid  in  15  days. 

Paid  cash  for  freight  on  last  invoice  $26.50,  and  for  drayage  on  same  $1.25. 

Sent  cash  to  Kephart  &  Co.  to  pay  their  invoice  recorded  yesterday,  after  deducting  the 
cash  discount  they  offered. 

Received  cash  from  C.  E.  Horton,  $40,  to  apply  on  C.  O.  D.  shipment  that  will  be  re- 
ported in  the  summary  of  carbon  duplicates. 

Received  cash  from  Kingman  &  Co.  to  pay  yesterday's  invoice,  less  the  cash  discount 
we  offered. 

Received  an  invoice  from  Hunter  &  Parsons,  New  York,  dated  Oct.  28th,  amounting  to 
$469.29,  bought  on  account  for  30  days  with  a  discount  offer  of  5  per  cent,  if  paid  in  ten  days. 


98 


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Paid  cash  for  freight  on  last  invoice  $14.50,  and  for  drayage  85c. 

Paid  cash  for  books  and  stationery  for  office  use,  $27.50. 

The  sales  for  the  day  for  which  bills  have  been  rendered  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

Henry  Thompson,  Thompsonville,  net  on  account,  $92.02. 

Ray  Turner,  Dayton,  cash  $50  (already  reported  for  cash  entry)  and  draft  at  5  days' 
sight  for  balance  (left  at  bank  for  collection),  the  total  of  the  bill  being  $108.24. 

H.  Sherman,  Creston,  2y2  per  cent  discount  10  days,  net  30  days,  $181.73. 

C.  E.  Horton,  Galesburg,  cash  paid  $40  (already  reported  for  cash  entry)  and  balance 
C.  O.  D.,  the  total  of  the  bill  being  $126.72. 

O.  Sherman,  City,  net  on  account,  $34.57. 

Reed  &  Young,  City,  net  on  account,  $108.20. 

3 

Received  cash  from  C.  E.  Gray,  for  rent  of  office  on  third  floor  of  store  building  for  one 
month,  $10. 

Paid  cash  for  postage,  $3.50. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $27.50. 

Received  draft  from  the  Bank  of  Galesburg  for  the  C.  O.  D.  bill  of  C.  E.  Horton,  sent 
out  yesterday,  less  collection  charges  deducted  by  the  bank,  25c. 

Received  an  invoice  from  H.  A.  Hudson  Company,  Falls  City,  dated  Nov.  1,  amount- 
ing to  $392.25,  billed  on  account  30  days,  with  a  discount  offer  of  3  per  cent  if  paid  in  10 
days. 

Paid  cash  for  freight  on  last  invoice  $25.50,  and  for  drayage  75c. 

Received  cash  from  E.  C.  Martin  to  pay  his  invoice  of  1st  inst,  less  a  cash  discount  of 
3  per  cent. 

Received  cash  from  Christy  &  Eckles  for  the  sale  that  will  be  reported  in  the  summary 
of  carbon  duplicates,  $95.27. 

Gave  cash  to  pay  for  office  furniture,  $37.75. 

Received  cash  from  Reed  &  Young  to  apply  on  their  account,  $50. 

Received  an  invoice  of  cranberries  from  C.  M.  Nelson,  Milwaukee,  dated  Nov.  1, 
amounting  to  $82.50,  bought  on  account  subject  to  their  sight  draft. 

Paid  cash  for  freight  on  cranberries  $5,  and  for  drayage  50c. 

Received  cash  from  J.  A.  Strong,  $45,  to  apply  on  C.  O.  D.  shipment  that  will  be  re- 
ported in  the  carbon  duplicates. 

Received  a  note  at  10  days  from  Henry  Thompson  for  $100,  to  apply  on  his  account. 

Received  an  invoice  of  wooden  ware  from  D.  M.  Stevens  &  Co.,  Detroit,  dated  Nov.  1, 
amounting  to  $127.50,  bought  on  account  60  days,  with  a  discount  offer  of  5  per  cent  if  paid 
in  10  days. 

Paid  cash  for  freight  $7.50,  and  for  drayage  25  cts.,  on  above  invoice. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates: 

E.  M.  Bundy,  Deerfield,  draft  at  sight  (left  at  bank  for  collection),  $81. 

Bemis  &  Brown,  Stanton,  3  per  cent  discount  10  days,  net  30  days,  $138.84. 

Christy  &  Eckles,  City,  cash  (already  reported  for  cash  entry),  $95.27. 

Henry  Thompson,  Thompsonville,  account  20  days,  $56.90. 

J.  A.  Strong,  Monmouth,  cash  paid  $45  (already  reported  for  cash  entry)  and  balance 
C.  O.  D.,  the  total  of  the  bill  being  $154.69. 

Emerson  &  Hatch,  Brownsville,  5  per  cent  discount  10  days,  net  30  days,  $132.66. 

Smith  &  Lee,  City,  net  on  account,  $55.23. 

Carry  out  the  totals  of  all  special  columns,  post  the  ledgers,  prove  the  side  ledgers,  bal- 
ance cash,  and  take  a  trial  balance  of  the  general  ledger. 

4 

Received  an  invoice  from  Kephart  &  Co.,  Philadelphia,  dated  Nov.  1,  amounting  to 
$960.60,  and  billed  on  account  for  60  days,  with  a  discount  offer  of  2l/2  per  cent  if  paid  in 
20  days. 


SPECIAL  COLUMN  BOOKS  101 


Paid  cash  $78  for  freight  and  drayage  on  above  invoice. 

Accepted  Hunter  &  Parson's  discount  offer  on  their  invoice  received  2d  inst,,  and  sent 
them  our  check  to  pay  the  balance  of  the  invoice  after  discount. 

Bemis  &  Brown  report  a  shortage  in  one  barrel  of  C  sugar,  the  net  weight  being  290  lbs. 
instead  of  312  lbs.  as  billed.  We  have  made  the  allowance  to  their  credit  at  the  price  we 
billed,  4  cts.  per  lb.     (Enter  in  the  journal.) 

Returned  to  C.  M.  Nelson,  1  brl.  cranberries,  received  the  3d  inst.,  the  same  being  below 
the  grade  represented,  for  which  we  have  charged  him  $8.80.     (Enter  in  journal.) 

Received  from  Henry  Carter  his  check  for  $48.53,  and  his  sight  draft  on  A.  C.  Furlong 
&  Co.,  Chicago,  for  $75,  for  the  sale  that  will  be  reported  in  the  summary  of  carbon  dupli- 
cates,    f  Consider  sight  drafts  of  other  firms  as  cash.) 

Gave  cash  to  H.  A.  Horton,  city,  for  200  brls.  apples  @  $1.75.  (Enter  in  purchase 
journal  and  cash  book,  checking  each  entry.    No  ledger  account  necessary.) 

Received  cash  at  bank,  for  the  proceeds  of  our  draft  on  Ray  Turner  left  for  collection 
2d  inst.     The  bank  deducted  25  cents  for  collection  charges. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $37.15. 

Paid  cash  for  drayage  on  sales  to  date,  $2.75. 

Paid  cash  for  insuring  merchandise,  $50. 

Received  cash  from  H.  Sherman  in  payment  of  his  bill  of  Nov.  2,  less  the  cash  discount 
we  offered. 

Gave  a  check  to  C.  E.  Hartman  for  salary  as  salesman,  $20. 

Forwarded  Henry  Carter's  draft  for  $75,  on  A.  C.  Furlong  &  Co.,  received  today,  to 
the  latter  firm  for  credit  on  our  account. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

Charles  Marvin,  city,  net  on  account,  $31.80. 

Henry  Carter,  city,  cash    (already   reported  for  cash  entry),  $123.53. 

James  Lee,  Vinton,  account  30  days,  $62.79. 

5 

Received  a  draft  from  the  Commercial  Bank  of  Monmouth  for  the  proceeds  of  the  C.  O. 
D.  bill  of  J.  A.  Strong  collected  by  them  after  deducting  50  cts.  for  collection  charges. 

Henry  Carter's  check  for  $48.53  which  we  received  yesterday  and  deposited  in  bank  as 
cash,  has  been  returned  unpaid,  with  protest  charges,  $1.10.  Gave  cash  to  the  bank  to  pay 
for  the  amount  of  protested  check  and  charges.  (Debit  "Sales  Ledger,"  and  also  debit 
Carter  in  the  sales  ledger.) 

Received  an  invoice  from  Grant,  Kennedy  &  Co.,  dated  Nov.  2,  amounting  to  $107.25, 
bought  on  account  30  days,  with  a  discount  offer  of  3  per  cent  for  cash  in  10  days. 

Paid  cash  for  freight,  $5.25,  and  for  drayage,  25  cts.  on  last  invoice. 

Received  cash  from  O.  Sherman  to  apply  on  account,  $25. 

Our  sight  draft  on  E.  M.  Bundy,  left  at  bank  for  collection,  has  been  paid,  and  proceeds, 
after  deducting  25  cts.  for  collection  charges,  have  been  handed  to  us. 

Gave  cash  to  pay  for  subscription  to  Bradstreet's  Mercantile  Agency  $25.  (To  be  used 
in  determining  the  responsibility  of  dealers  who  may  order  from  us.) 

J.  A.  Strong  has  reported  an  overcharge  of  6  lbs.  .tea  @  42^c.  in  our  invoice  to  him  of 
3d  inst.,  and  we  have  sent  him  a  check  for  the  amount  less  the  cash  discount  of  3  per  cent 
estimated  on  tea  in  his  invoice.     (Debit  Mdse.) 

The  student  has  received  cash,  $500,  a  bequest  from  a  friend  recently  deceased,  and  has 
invested  the  same  in  the  business,  thereby  increasing  his  capital.     (Cash  book.) 

Received  cash  from  Smith  &  Lee  to  apply  on  account,  $50. 

Bemis  &  Brown  have  discounted  their  bill  of  3d  inst.,  sending  us  a  bank  draft  for  the 
proceeds  of  the  bill,  discounted  after  deducting  the  shortage  reported  on  the  4th  inst. 

Received  an  invoice  of  cranberries  from  C.  M.  Nelson,  Milwaukee,  dated  Nov.  3, 
amounting  to  $80,  bought  on  account,  subject  to  his  sight  draft. 

Paid  cash  for  freight  and  drayage  on  last  invoice,  $5. 


102  ADVANCED  ACCOUNTING 


Discounted  and  paid  the  H.  A.  Hudson  Co.'s  invoice  of  3d  inst,  sending  our  check  for 
the  proceeds. 

Emerson  &  Hatch  have  written  asking  us  to  deduct  discount  from  their  bill  of  the  3d 
inst.,  at  the  rate  we  offered,  and  draw  on  them  at  sight  for  the  proceeds,  which  we  have 
done,  leaving  the  draft  at  our  bank  for  collection.     (Enter  the  discount  in  the  journal:) 

Paid  cash  for  stove  for  heating  office,  $24.50. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $22.85. 

Received  cash  from  Henry  Taylor  for  rent  of  an  office  on  third  floor  of  our  building, 
$12.50. 

Sent  A.  C.  Furlong  &  Co.,  cash  per  draft,  $250,  to  apply  on  account. 

Received  cash  for  sundry  sales,  without  billing,  $125. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

Kingman  &  Co.,  Toledo,  2  per  cent  discount  10  clays,  net  30  days,  $115.36. 

O.  Sherman,  city,  net  on  account,  $38.25. 

Henry  Thompson,  Thompsonville,  net  10  days,  $95.53. 

Smith  &  Lee,  city,  net  on  account,  $125.81. 

7 

Paid  cash  for  advertising,  $9.25. 

Paid  C.  M.  Nelson's  sight  draft  on  us  for  $73.70. 

Received  an  invoice  from  Hunter  &  Parsons,  New  York,  dated  Nov.  4,  amounting  to 
$75.75,  bought  on  account  60  days,  with  a  discount  offer  of  5  per  cent  if  paid  in  15  days. 

Paid  cash  for  freight  $3.25,  and  for  drayage  25  cts.,  on  last  invoice. 

Received  cash  from  J.  E.  Johnson,  $25,  to  apply  on  C.  O.  D.  shipment  that  will  be 
reported  in  the  carbon  duplicates. 

Gave  a  check  to  pay  for  printing  and  stationery  for  use  in  the  office,  $17.75. 

Received  cash  from  Reed  &  Young  to  apply  on  account,  $75. 

Received  an  invoice  of  flour  from  A.  C.  Furlong  &  Co.,  Chicago,  dated  Nov.  5,  amount- 
ing to  $127.50,  billed  on  account. 

Paid  cash  for  freight  $12.50,  and  for  drayage  75  cts.,  on  last  invoice. 

Sent  A.  C.  Furlong  &  Co.  a  check  for  $150  to  apply  on  account. 

Paid  cash  for  additional  freight  on  Furlong  &  Co.'s  invoice,  $1. 

Received  cash  from  bank  for  proceeds  of  our  draft  on  Emerson  &  Hatch,  left  for  col- 
lection 5th  inst.,  after  allowing  50  cts.  for  collection  charges. 

Received  cash  for  sundry  sales  at  retail,  without  billing,   $33.29. 

Paid  cash  to  each  partner,  $25,  for  his  salary  to  date. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

Henry  Thompson,  Thompsonville,  net  20  days,  $78.74. 

J.  E.  Johnson,  Wayneville,  cash  paid  $25  (already  reported  for  cash  entry)  and  balance 
C.  O.  D.,  the  total  of  the  bill  being  $88.59. 

Reed  &  Young,  city,  net  on  account,  $52.20. 

H.  Sherman,  Creston,  2  per  cent  discount  10  days,  net  30  days,  $86.45. 

Carry  out  the  totals  of  all  special  columns,  post  the  ledgers,  prove  the  side  ledgers, 
balance  cash,  and  take  a  trial  balance  of  the  general  ledger. 

8 

Preparatory  to  closing  the  books,  we  have  taken  inventory,  with  the  following  results : 
The  merchandise  on  hand  amounts  to  $8958.77. 

Books  and  stationery,  purchased  for  office  and  not  used,  are  worth  $30. 
Stove  purchased  for  office  worth  $24. 
Other  furniture  is  now  worth  $35. 
Unexpired  rent  of  store  building  amounts  to  $100. 
Office  rents  collected  by  us  and  unexpired  amount  to  $15. v  .. 

Make  a  six-column  balance  sheet  and  distribute  the  net  gain  according  to  the  terms  of 
the  contract. 


SPECIAL  COLUMN  BOOKS  103 


Close  the  general  ledger,  except  the  partners'  accounts,  giving  each  partner  credit  for 
his  share  of  the  net  gain. 

The  student  has  drawn  out  cash,  $169.17. 

C.  A.  Carpenter  has  drawn  out  cash,  $592.08. 

Balance  Carpenter's  and  the  student's  accounts,  and  bring  down  the  net  investment  of 
each. 

Henry  Hudson  has  been  admitted  as  a  third  partner  in  the  business,  having  invested 
the  store  building  now  occupied  by  the  firm,  valued  at  $6000,  and  cash  enough  to  make  his 
investment  one-half  of  the  entire  capital  of  the  new  firm.  Hudson  devotes  no  time  to  the 
business  and  receives  no  salary.  The  other  partners  devote  their  time  to  the  business  aitf 
receive  salaries  as  stipulated  in  the  former  contract,  after  which  each  partner  shares  in  the 
gain  or  loss  according  to  his  average  invested  capital. 

Hudson  has  also  paid  the  firm  cash  $600,  $100  being  for  rebate  on  rent  prepaid,  and 
$500  being  his  portion  of  the  estimated  good  will  of  the  business,  the  latter  not  being  named 
in  the  inventory. 

9 

Received  cash  from  James  Lee  for  his  invoice  of  Nov.  4,  less  2l/2  per  cent  discount. 

Paid  Grant,  Kennedy  &  Co.  for  their  invoice  of  1st  inst.,  after  deducting  the  discount 
they  offered,  the  net  amount  paid  them  being  $1430.55. 

Received  an  invoice  of  cheese  from  the  H.  A.  Hudson  Co.,  Falls  City,  dated  Nov.  7, 
amounting  to  $119.75,  bought  on  account,  with  a  discount  offer  of  5  per  cent  if  paid  in  10 
days. 

Paid  cash  for  freight  $7.20,  and  for  drayage  60  cents  on  last  invoice. 

Sent  cash  to  D.  M.  Stevens  &  Co.  to  pay  their  invoice  credited  3d  inst.,  less  the  dis- 
count they  offered. 

Received  cash  from  Charles  Marvin  in  payment  of  his  invoice  of  4th  inst.,  less  2  per 
cent  discount. 

Received  cash  from  Smith  &  Lee  to  apply  on  account,  $80. 

Bought  Henry  Carter's  stock  of  groceries  in  order  to  save  our  account,  as  he  was  un- 
able to  pay  his  bills.  Allowed  him  $429.75  for  the  entire  stock,  assuming  to  pay  Kephart 
&  Co.  $127.25,  Hunter  &  Parsons  $76.29,  and  giving  Carter  cash  for  the  balance  due  after 
deducting  our  account  against  him.     (Enter  in  journal  and  cash  book.) 

Paid  cash  for  postage,  $1.50. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $36.21. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

E.  C.  Martin,  city,  net  on  account,  $195.33. 

Charles  Marvin,  city,  net  on  account,  $158.87. 

E.  M.  Bundy,  Deerfield,  draft  at  sight  (left  at  bank  for  collection),  $174.81. 

Ray  Turner,  Dayton,  net  on  account,  $87.72. 

10 

Received  cash  from  H.  Thompson,  $100,  in  payment  of  his  note. 

Received  a  draft  from  the  Bank  of  Waynesville  for  the  amount  of  the  C.  O.  D.  bill  sent 
to  J.  E.  Johnson,  7th  inst.,  less  50  cts.  deducted  by  the  bank  for  collection  charges. 

Received  cash  for  the  rent  of  two  orifices  in  the  third  floor  of  our  building,  $21.50. 

H.  Sherman  has  paid  his  invoice  of  the  7th  inst.,  less  the  cash  discount  we  offered. 

Paid  A.  C.  Furlong. &  Co.  cash,  $146.78,  for  balance  due  on  their  invoice  of  2d  inst., 
after  deducting  payments  already  made  and  $9.47  discount  for  payment  of  entire  bill  within 
15  days. 

Received  cash  from  E.  C.  Martin  to  apply  on  account,  $75. 

Paid  cash  for  painting  the  front  of  our  store  building,  $47.50.     (Real  Estate.) 

Received  cash  from  O.  Sherman,  $125,  to  apply  on  sale  that  will  be  reported  in  the 
summary  of  carbon  duplicates. 

Discounted  Hunter  &  Parson's  invoice  of  7th  inst.,  at  the  rate  they  offered,  sending 
cash  for  the  proceeds. 


104  ADVANCED  ACCOUNTING 


Received  an  invoice  from  Kephart  &  Co.,  Philadelphia,  dated  Nov.  5,  amounting  to 
$275.25,  billed  on  account  30  days,  subject  to  a  discount  of  V/2  per  cent  for  cash  in  10  days. 

Paid  cash  for  freight  on  last  invoice,  $13.25. 

Received  cash  from  Smith  &  Lee  to  apply  on  account,  $60. 

Paid  cash  for  electric  light  in  the  store  room,  $7.50. 

Received  an  invoice  of  woodenware  from  D.  M.  Stevens  &  Co.,  Detroit,  dated  Nov. 
7,  amounting  to  $77.25,  bought  on  account. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $30.50. 

Paid  cash  for  freight,  $2.50,  and  for  drayage,  25  cts.  on  last  invoice. 

Sent  Chas.  Marvin  a  memorandum  of  credit  for  overcharge,  20  lbs.  G  Sugar  @  4 24  c, 
sale  9th  inst. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

Emerson  &  Hatch,  Brownsville,  3  per  cent  discount  10  days,  net  30  days,  $90.75. 

Bemis  &  Brown,  Stanton,  net  on  account,  $126.74. 

O.  Sherman,  city,  the  Carter  stock  of  groceries,  cash  $125  (already  reported  for  cash 
entry)  and  balance  on  account,  the  total  amount  of  the  bill  being  $425. 

Smith  &  Lee,  city,  net  on  account,  $111.26. 

11 

Received  cash  from  Reed  &  Young  to  apply  on  account,  $25. 

Received  cash  for  rent  of  hall  in  our  store  building,  $25. 

Paid  cash  for  clerk  hire,  $17.50. 

Discounted  Kephart  &  Co.'s  invoice  received  4th  inst.,  at  the  rate  they  offered,  sending 
cash  for  the  proceeds. 

Received  cash  for  sundry  sales,  without  billing,  $136.25. 

The  H.  A.  Hudson  Co.  of  Falls  City  have  discovered  an  overcharge  in  their  invoice  of 
9th  inst.,  and  have  sent  us  memo,  of  credit  for  the  excess,  $11.80. 

Emerson  &  Hatch  write  us  reporting  an  overcharge  of  1  ct.  per  pound  on  the  cheese  sold 
them  10th  inst,  and  we  have  given  them  credit  for  the  amount  reported,  $1.89. 

Our  sight  draft  on  E.  M.  Bundy,  left  at  bank  9th  inst.,  has  been  paid  and  we  have  re- 
ceived cash  for  the  proceeds  after  a  deduction  of  50  cts.  for  collection  charges. 

By  consent  of  the  firm,  H.  Hudson  has  withdrawn  $1000  from  his  invested  capital,  re- 
ceiving cash  for  the  same. 

Received  cash  from  Charles  Marvin  to  apply  on  account,  $70. 

Gave  check  to  pay  for  building  a  new  sidewalk  in  front  of  our  store  room,  $37.50. 

Received  a  note  at  one  day  from  Smith  &  Lee  for  $102.30  to  balance  their  account. 

Gave  cash  to  pay  C.  M.  Nelson's  sight  draft  on  us  for  the  balance  of  his  account,  $80. 

Received  cash  from  Kingman  &  Co.,  for  proceeds  of  their  invoice  of  5th  inst.,  after  de- 
ducting the  discount  we  offered. 

Paid  cash  for  postage  and  stationery,  $3.50. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $29.35. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

Reed  &  Young,  city,  net  on  account,  $58.01. 

James  Lee,  Vinton,  net  on  account,  $68.73. 

Kingman  &  Co.,  Toledo,  5  per  cent  discount  10  days,  net  30  days,  $76.75. 

H.  Sherman,  Creston,  net  on  account,  $53.18. 

Carry  out  the  totals  of  all  special  columns,  post  the  ledgers,  prove  the  side  ledgers,  bal- 
ance cash,  and  take  a  trial  balance  of  the  general  ledger. 

12 

Paid  A.  C.  Furlong  cash  for  invoice  of  7th  inst,  less  discount  on  same  of  5  per  cent. 

Received  cash  from  O.  Sherman  to  apply  on  account,  $150. 

Paid  cash  for  clerk  hire,  $35. 

Received  cash  from  E.  C.  Martin  to  apply  on  account,  $40. 


SPECIAL  COLUMN  BOOKS  105 


Received  cash  for  sundry  sales  at  retail,  without  billing,  $190.80. 

Received  cash  from  Kingman  &  Co.  in  payment  of  their  invoice  of  11th  inst,  less  the 
discount  we  offered. 

Sent  Bemis  &  Brown  a  memorandum  of  credit  for  1  sack  of  rice,  100  lbs.  @  4^4c,  re- 
ported short  in  our  sale  of  the  10th  inst. 

Sent  our  check  to  Hunter  &  Parsons  to  balance  their  account. 

Paid  cash  for  repairs  and  improvements  on  our  store  building,  $125. 

Received  cash  from  E.  M.  Bundy,  $25,  to  apply  on  sale  that  will  be  reported  in  the 
summary  of  carbon  duplicates. 

Received  cash  for  hall  rent  in  our  building,  $17.50. 

Discounted  the  H.  A.  Hudson  Co.'s  invoice,  received  the  9th  inst.,  sending  them  our 
check  for  the  proceeds,  after  deducting  the  discount  they  offered. 

Bemis  &  Brown  have  sent  us  cash  to  pay  their  invoice  of  the  10th  inst.,  after  deducting  a 
cash  discount  of  3  per  cent. 

Paid  cash  for  fuel  for  heating  office,  $3.50. 

We  have  allowed  H.  Thompson  a  discount  of  3  per  cent  on  the  balance  of  his  account, 
and  he  has  paid  us  cash  in  full  for  the  balance  due. 

The  sales  for  the  day,  for  which  bills  have  been  rendered,  are  represented  in  the  follow- 
ing summary  of  the  carbon  duplicates : 

E.  C.  Martin,  city,  net  on  account,  $39.85. 

E.  M.  Bundy,  Deerfield,  cash,  $25,  (already  reported  for  cash  entry)  and  draft  at  sight 
for  the  balance,  (left  at  bank  for  collection)  the  total  of  the  bill  being  $107.62. 

14 

Received  cash  from  Emerson  &  Hatch  in  payment  of  their  invoice  of  10th  inst.,  less  the 
cash  discount  they  were  authorized  to  deduct. 

Paid  cash  for  drayage  to  date  on  invoices  of  merchandise,  $2. 

Gave  a  check  to  pay  Kephart  &  Co.'s  sight  draft  on  us  for  $127.25  to  apply  on  account. 

Received  cash  from  O.  Sherman  in  full  of  account. 

The  following  carbon  duplicate  represents  today's  sales  for  entry  in  the  sales  journal : 

Reed  &  Young,  city,  net  on  account,  $53.73. 

Paid  cash  for  50  brls.  apples  @  $1.75,  without  invoice.     (Enter  only  in  Cash  Book.) 

Received  cash  from  Reed  &  Young  in  full  of  their  account,  including  today's  sale,  the 
whole  amount  due  us  being  discounted  2  per  cent. 

Received  cash  from  Smith  &  Lee,  $102.30,  in  payment  of  their  note. 

Paid  cash  for  postage  and  stationery,  $3.75. 

Received  cash  from  James  Lee  to  pay  his  invoice  of  11th  inst.,  less  a  cash  discount  of 
2^  per  cent. 

Our  sight  draft  on  E.  M.  Bundy  has  been  paid  and  the  bank  has  given  us  cash  for  the 
proceeds,  after  deducting  25  cts.  for  collection  charges. 

Received  cash  for  sundry  sales  at  retail,  without  billing,  $245.25. 

Drew  at  sight  on  E.  C.  Martin,  in  favor  of  Grant,  Kennedy  &  Co.,  for  the  balance  due 
them,  and  sent  them  the  draft  to  balance  their  account. 

Sent  cash  to  D.  M.  Stevens  &  Co.  to  pay  their  invoice  of  10th  inst.,  less  a  cash  discount 
of  5  per  cent. 

Received  cash  from  Ray  Turner  to  pay  his  invoice  of  9th  inst.,  less  a  cash  discount  of 
5  per  cent. 

Received  cash  from  H.  Sherman  in  full  of  his  account  less  a  special  discount  of  $1. 

Received  cash  from  E.  C.  Martin  in  full  of  his  account,  $12.93. 

Received  cash  from  C.  Marvin  for  balance  of  his  account  less  a  discount  of  2l/2  per  cent. 

Paid  cash  for  proceeds  of  Kephart  &  Co.'s  invoice  of  10th  inst.,  after  deducting  the  dis- 
count they  offered. 

15 

The  student  and  C.  A.  Carpenter  have  each  drawn  $25,  for  salary  due  them  to  15th  inst. 
Paid  cash  for  gas  bill  to  date,  $5.36. 


106  ADVANCED  ACCOUNTING 


The  firm  of  C.  A.  Carpenter  &  Co.  have  decided  to  dissolve  partnership,  the  student  and 
H.  Hudson  withdrawing,  and  Carpenter  continuing  the  business. 

C.  A.  Carpenter  takes  the  stock  of  merchandise  on  hand  inventoried  at  $7609.72,  allow- 
ing for  the  prepaid  expenses  $25,  for  orifice  furniture  $50,  and  for  the  good  will  of  the  busi- 
ness $600,  the  same  being  charged  to  his  account. 

Henry  Hudson  takes  back  the  real  estate,  inventoried  at  $6200,  the  same  being  charged 
to  his  account. 

Carry  out  the  totals  of  all  special  columns,  post  the  ledgers,  close  all  sales  and  purchase 
ledger  accounts  that  are  in  balance,  prove  the  side  ledgers,  balance  cash,  and  take  a  trial  bal- 
ance of  the  general  ledger. 

Make  a  six-column  balance  sheet,  distributing  the  net  gain  according  to  the  terms  of 
the  contract. 

Close  the  general  ledger  accounts  except  the  partners'  accounts. 

C.  A.  Carpenter  invests  enough  cash  to  balance  his  account  after  allowing  for  his  share 
of  the  net  gain. 

The  student  and  Henry  Hudson  each  draw  out  cash  to  balance  their  accounts  after 
allowing  for  their  share  of  the  net  gain. 

The  partners'  accounts  should  now  be  closed,  no  balance  account  being  required. 

QUESTIONS  FOR  REVIEW 

1.  What  are  the  advantages  of  having  purchase  accounts  and  sales  accounts  in  special 
side  ledgers? 

2.  What  accounts  are  used  in  the  general  ledger,  to  keep  a  check  on  entries  in  the 
side  ledgers? 

3.  If  side  ledgers  are  used,  what  special  columns  will  be  required  in  the  journal? 

4.  If  side  ledgers  are  used,  what  special  columns  will  be  required  in  the  cash  book  ? 

5.  What  title  is  used  for  discounts  on  merchandise? 

6.  What  cash  book  entries  will  be  made  if  a  firm  to  whom  we  have  sold  merchandise, 
deducts  a  cash  discount  and  pays  the  proceeds  ? 

7.  What  cash  book  entries  will  be  made  if  we  deduct  a  cash  discount  from  an  invoice 
of  purchase  and  pay  the  proceeds  ? 

8.  How  can  maturity  dates  and  discount  rates  be  recorded  for  convenient  reference? 

9.  If  carbon  duplicates  are  kept  of  all  sales,  what  entries  will  be  required  in  the  sales 
book  ? 

10.  If  invoices  are  received  for  purchases,  what  entries  will  be  required  in  the  pur- 
chase book  ? 

11.  What  debits  and  credits  are  posted  from  the  sales  journal  to  the  general  ledger  ? 

12.  What  debits  and  credits  are  posted  from  the  purchase  journal  to  the  general  ledger  ? 

13.  How  should  accounts  be  kept  with  C.  O.  D.  shipments  to  firms  that  do  not  have 
ledger  accounts? 

14.  If  a  general  ledger  and  two  side  ledgers  are  used,  what  trial  balances  will  be  re- 
quired to  "prove  the  ledgers?" 

15.  What  trial  balance  will  be  required  for  making  a  financial  statement  or  balance 
sheet  ? 


JOURNALIZING  DRILLS 


107 


Drill  No.  13. 

STOCK  AND  BOND  ACCOUNTS 

Stocks  are  shares  in  incorporated  companies,  and  are  bought  and  sold  the  same  as  other 
classes  of  property.  Shares  of  stock  are  usually  in  denominations  of  $100,  $50,  or  $25,  and 
are  bought  or  sold  at  a  stated  per  cent  of  the  face  or  "par"  value. 

Dividends  are  profits  distributed  (usually  in  cash)  among  the  shareholders  of  a  com- 
pany. 

Bonds  are  promissory  securities  issued  by  the  government  or  the  state  or  by  corpor- 
ations, public  or  private.  They  are  usually  of  the  denominations  of  $100,  $500,  $1000,  etc. 
They  run  for  a  term  of  years,  and  bear  a  stated  rate  of  interest,  payable  quarterly,  or  semi- 
annually, which  is  collected  through  the  presentation  of  small  interest  tickets,  or  "coupons" 
attached  to  the  bond,  and  removable  consecutively  in  the  order  in  which  they  fall  due.  Bonds 
are  not  regarded  as  Bills  Receivable,  and  are  bought  or  sold  as  any  other  class  of  property. 

Separate  accounts  are  kept  with  the  different  kinds  of  Stocks  or  Bonds  dealt  in,  each 
being  debited  with  its  cost  when  received,  and  credited  when  sold,  the  same  as  other  classes 
of  property.  The  several  accounts  with  stocks  are  credited  for  dividends  received  through 
them,  and  debited  for  assessments,  taxes,  brokerage,  or  other  cost  charges  incurred  in  connec- 
tion with  them.  The  Bond  Accounts,  likewise,  are  credited  for  all  interest  collected  on  them, 
and  debited  for  brokerage  or  other  expense  charges. 

TRANSACTIONS  FOR  JOURNALIZING,  SEPTEMBER,   19— 


1.  We  have  purchased  for  the  firm  from 
A.  C.  Dawson,  20  shares  of  the  Ridgeway 
Coal  Co.  stock  at  61,  paying  for  the  same 
with  our  check. 

Note. — In  this  and  the  following  Drills,  assume 
that  the  par  value  of  all  shares  is  $100,  unless  other- 
wise specified.  Shares  purchased  "at  61,"  implies 
that  the  shares  were  purchased  at  61  per  cent  of 
their  par  value,  or  $61  for  each  share.  In  this  trans- 
action open  an  account  with  "Ridgeway  Coal," 
charging  it  with  the  cost  of  the  shares. 

2.  Haynes  &  Welch,  brokers,  have  pur- 
chased for  us  on  our  account,  $5000  in 
bonds  of  the  Cedar  Valley  R.  R.  at  96>4, 
brokerage  %. 

Note. — Charge  account  with  "Cedar  Valley  Bonds." 
"Brokerage  %,"  means  that  T/i  oi  1  per  cent,  or  25 
cents  per  $100,  is  charged  for  purchasing. 

3.  We  have  presented  to  the  Company 
treasurer,  coupons  for  quarterly  interest,  at 
6  per  cent  on  $3000  of  Parkville  Water 
Works  Bonds,  held  by  us,  and  received  his 
check  in  payment  of  same. 

4.  We  have  paid  with  our  check,  an 
assessment  of  5  per  cent  on  20  shares  of 
Oakdale  Creamery  stock,  held  by  us. 

5.  The  Secretary  of  the  Ridgeway  Coal 
Co.  has  handed  us  a  check  for  our  dividend 
of  6  per  cent  on  15  shares  of  that  stock  held 
by  us. 

6.  We  have  subscribed  for  25  shares  of 
stock  in  the  Lake  Park  Improvement  Co., 
and  have  given  our  check,  for  the  first  in- 
stallment of  20  per  cent. 


7.  Haynes  &  Welch  have  sold  for  us  to 
John  H.  Rice,  on  his  note  at  60  days,  12 
shares  of  Consolidated  Gas  Co.  stock  at  85, 
brokerage  %■ 

8.  We  have  deposited  coupons  for  quar- 
terly interest  on  $8000  of  Illinois  Five  Per 
Cents,  held  by  us. 

Note. — "Illinois  Five  Per  Cents"  implies  State 
bonds  of  111.  bearing  interest  at  5  per  cent.  Banks 
receive  coupons  on  standard  bonds  of  this  class  as 
cash,  making  no  charge  for  collection.  The  bank  is 
here  charged  with  the  deposit  of  "111.  Five  Per 
Cents"  credited. 

9.  The  Globe  Printing  Co.,  in  which  we 
hold  20  shares,  has  declared  a  dividend  of  8 
per  cent,  and  we  have  received  the  Secre- 
tary's check  for  the  amount. 

10.  We  have  transferred  to  Fenton  & 
Davis,  to  apply  on  our  account,  5  shares  of 
"Ridgeway  Coal''  at  85. 

11.  Our  bank  reports  the  collection  of 
A.  D.  Bennett's  acceptance  of  $176.14,  hav- 
ing placed  the  amount,  less  collection 
charges,  50  cents,  to  Qur  credit. 

12.  Settled  our  account  with  S.  A.  Ellis 
&  Co.  by  handing  them  a  check  for  $150 
and  our  acceptance  at  30  days  for  $85.60. 

13.  The  Farmer's  Bank  presents  for  col- 
lection our  note,  favor  of  Farnham  &  Co., 
for  $240,  with  accrued  interest,  $7.50.  We 
give  our  check  for  the  amount. 

14.  Harper  &  Co.,  our  brokers,  have 
sold  for  us  40  shares  "Union  Copper"  at 
81,  and  have  remitted  bank  draft  for  pro- 
ceeds, less  brokerage,  %. 


108 


ADVANCED  ACCOUNTING 


Drill  No.  14. 

STOCK  AND  BOND  ACCOUNTS— Continued 


TRANSACTIONS  FOR  JOURNALIZING,  OCTOBER,   19- 


1.  Chas.  S.  Miller  &  Co.  have  sold  for 
us,  40  shares  of  Hocking  Valley  at  46j4, 
brokerage  }4  >  and  remitted  proceeds  in  cash. 

2.  We  have  paid  with  our  check  an  ad- 
ditional installment  of  25  per  cent  on  our  25 
shares  of  Lake  Park  Improvement  Stock. 

3.  T.  W.  Scott  has  transferred  to  us  to 
be  applied  on  his  account,  5  shares  of  paid 
up  stock  in  the  Suburban  Transit  Co.  at  58. 

4.  Haynes  &  Welch  have  sold  for  us, 
$2500  in  C,  R.  I.  &  P.  R.  R.  Bonds,  at  95, 
brokerage  Ys,  applying  proceeds  to  our  ac- 
count. 

5.  We  have  received  a  check  for  quar- 
terly interest  at  6  per  cent  on  the  $5000 
Cedar  Valley  Bonds  held  by  us. 

6.  We  have  sold  our  real  estate  property 
at  76  Walnut  Ave.  to  Harmer  &  Co.  for 
$2500,  receiving  in  payment  20  shares  of 
stock  in  the  Union  Copper  Mining  Co.  at 
45*  and  their  check  for  the  balance. 

7.  B.  F.  Nelson,  partner,  has  increased 
his  investment  by  transferring  to  the  firm, 
$2000  of  Suburban  Transit  First  Mortgage 
Bonds  at  9Sy2. 

8.  We  have  bought  through  Yates  & 
Walsh,  brokers,  500  shares  in  the  Bonaven- 
ture  Oil  Co.,  of  Beaumont,  Texas,  at  75 
cents  per  share,  and  have  drawn  our  check 
in  payment  for  the  same,  including  their 
brokerage  of  5  per  cent  on  cost. 

Note.— In  the  case  of  mining  and  other  stocks 
sold  at  a  very  low  percentage  of  their  par  value, 
brokers  charge  brokerage  or  "Commission"  on  the 
cost  instead  of  the  par  value  of  the  shares. 

9.  We  have  sold  to  J.  W.  Moore,  10 
shares  of  stock  in  the  Hall  Manufacturing 
Co.  at  75  taking  his  note  at  60  days  for  one- 
half  the  amount,  and  his  check  for  the  bal- 
ance. 

10.  We  have  purchased  the  residence 
property  at  No.  56  Poplar  St.  for  $3500. 
We  have  given  in  payment  $2000  in  Subur- 
ban Transit  Co.  Bonds  at  par,  10  shares  of 
Merchants  Bank  Stock  at  105,  and  our 
check  for  balance. 


11.  An  assessment  of  15  cents  per  share 
has  been  levied  on  the  stock  of  the  Bona  ven- 
ture Oil  Co.,  Beaumont,  Texas.  We  remit 
Postal  Money  Order  for  the  required 
amount  on  our  500  Shares,  paying  cash  for 
money  order  and  also  for  fee,  25  cents. 

12.  We  have  given  our  check  for  $41.20 
for  taxes  on  our  property  at  No.  56  Poplar 
St. 

13.  J.  S.  Enfield  has  transferred  to  us  5 
shares  of  stock  in  the  Drover's  Bank  at  110, 
to  apply  as  a  payment  on  his  note  of  Jan.  1, 
in  our  favor. 

14.  We  hold  $1500  in  Ray  Co.,  Iowa,  6 
per  cent  bonds,  which  have  matured,  and 
the  County  Treasurer  has  forwarded  us  a 
N.  Y.  draft  for  their  face,  plus  the  last 
quarter's  interest. 

15.  Our  bank  reports  the  collection  of 
George  Dean's  note,  $146.50,  with  accrued 
interest,  $7.20.  Collection  charges  50  cts. ; 
proceeds  credited  to  us. 

16.  Haynes  &  Welch  have  purchased  on 
our  account  250  shares  of  "Diamond  Match 
Preferred"  at  71  #,  brokerage  Ys- 

17.  We  have  received  from  the  Secre- 
tary of  the  Union  Copper  Mining  Co.,  Den- 
ver, Colorado,  a  check  for  a  five  per  cent 
dividend  on  the  20  shares  held  by  us. 

18.  Our  bank  reports  collection  of  C. 
H.  Milton's  acceptance  in  our  favor  for 
$135.20,  placing  proceeds  to  our  credit,  less 
50  cents  for  collection. 

19.  "Diamond  Match  Preferred'  has 
advanced,  and  we  have  directed  Haynes  & 
Welch  to  close  out  the  shares  purchased  for 
us  on  account  in  Transaction  16,  at  the 
market  quotation,  79^.  They  report  sale 
of  stock  with  brokerage  charge  y%,  pro- 
ceeds to  our  credit. 

20.  We  have  given  our  check  for  $29.15 
for  advertising  bill  to  date  . 


JOURNALIZING  DRILLS 
i 


109 


Drill  No.  15. 


COMMISSION  AND  SHIPPING  BUSINESS 

A  general  account  with  "Shipments"  will  be  kept  in  this  drill,  which  account  will  be  deb- 
ited for  the  local  market  value  of  goods  included  in  the  shipments  and  for  all  expenses  in- 
curred for  crating,  drayage,  prepaid  transportation,  etc. ;  and  this  account  will  be  credited  for 
receipts  as  shown  by  the  several  account  sales. 

A  separate  account  is  kept  with  each  consignment  debiting  it  for  all  charges  and  cred- 
iting it  for  all  sales  pertaining  to  it.  The  consignments  are  designated  by  numbers  in  con- 
secutive order. 

An  account  will  be  kept  with  "Consignment  Commissions"  for  all  commissions  received 
on  the  sale  of  consignment  goods,  and  a  separate  account  will  be  kept  with  "Produce  Com- 
missions" for  all  commissions  paid  by  us  for  the  purchase  of  produce. 

TRANSACTIONS  FOR  JOURNALIZING,  NOVEMBER,  19— 


1.  Shipped  to  the  Producer's  Commis- 
sion Co.,  Chicago,  1000  lbs.  butter,  local 
price  22c,  to  be  sold  as  instructed.  Paid 
cash  for  drayage  on  this  shipment,  75c. 
(Charge  "Shipment"  for  local  value  of  but- 
ter and  drayage,  and  credit  "Mdse."  and 
Cash.) 

2.  Seymour  &  Sons,  St.  Louis,  remit 
account  sales  with  cash  for  commission 
shipment  of  Oct.  25,  $165.90. 

3.  We  have  paid  cash  for  freight  and 
drayage  on  a  consignment  of  bananas  (Con. 
No.  12)  from  L.  Colenzo  &  Co.,  Chicago, 
$41.25. 

4.  Sold  to  H.  H.  Cole  &  Co.,  on  account, 
a  bill  of  goods  amounting  to  $182.90,  of 
which  $134.30  is  our  merchandise,  and  the 
remainder  belonging  to  Con.  No.  9. 

5.  We  render  an  account  sales  to  C.  B. 
Stuart  &  Co.,  Milwaukee,  for  Con.  No.  6, 
$245.60,  less  storage  charges  $3.50  and 
commission  $12.10,  remitting  our  local 
check  for  the  proceeds.  (Charge  Con.  No. 
6  and  credit  Storage,  Commission,  and 
Cash. ) 

6.  Shipped  to  S.  F.  Baker  &  Co.,  St. 
Louis,  produce  as  per  Shipment  Register, 
$321.15,  paying  cash  for  drayage,  $1.25. 

7.  Sold  to  N.  Smith,  on  account,  goods 
from  Con.  No.  12,  as  billed,  $59.20. 

8.  We  have  received  from  the  American 
Fruit  Co.,  Cleveland,  Ohio,  a  carload  com- 
mission consignment  of  cranberries  (Con. 
No.  13.)  We  pay  cash  for  freight,  dray- 
age, and  insurance,  $72.25. 

9.  The  goods  of  Con.  No.  11  have  been 
closed  out,  and  we  send  account  sales  to  the 
consignors  for  $291.60,  deducting  charges 


for  commission  at  5  per  cent  and  storage 
$3.75,  and  sending  our  note  at  30  days  for 
the  net  proceeds. 

10.  J.  R.  Joyce  &  Co.  send  account  sales 
of  a  shipment  of  butter  recently  sent  them, 
with  their  note  at  60  days  for  the  net  pro- 
ceeds, $214.60. 

11.  We  have  shipped  to  the  Union  Com- 
mission Co.,  Chicago,  a  consignment  of 
3000  lbs.  of  live  poultry;  local  market  price 
5^4  cents,  and  paying  drayage  in  cash  $1.75. 

12.  We  send  an  account  sales  of  Con. 
No.  10,  $429.50,  deducting  com.  5  per  cent, 
storage  $2.15,  and  remitting  our  check  on 
First  National  Bank,  Chicago,  for  the  pro- 
ceeds. 

13.  Paid  bill  of  St.  Louis  Paper  Co.,  for 
wrapping  paper  for  store  use,  $29.60. 

14.  Sold  to  Baker  &  Scott  goods  per 
bill  rendered,  as  follows :  Merchandise 
$217.30,  and  goods  of  Con.  13  $24.50. 
They  hand  us  their  check  for  $200;  balance 
on  account  at  30  days. 

15.  We  shipped  a  commission  consign- 
ment of  1500  doz.  eggs  to  the  Blair  Pro- 
duce Co.,  Cincinnati,  market  price  17c. 

16.  We  have  bought  on  our  own  ac- 
count, 25  boxes  of  oranges  belonging  to 
Con.  14,  at  $3.15. 

17.  Rec'd  of  Chicago  Fruit  Co.  a  com- 
mission consignment  of  Florida  oranges 
(Con.  No.  14),  paying  cash  for  freight  and 
drayage  on  same,  $31.50. 

18.  Sold  to  H.  Loretto  &  Co.  goods  of 
Con.  No.  12,  $58.60,  and  Con.  No.  13, 
$21.60,  and  Con.  No.  14,  $25.  They  hand 
us  their  check  for  $75,  balance  on  account. 


no 


ADVANCED  ACCOUNTING 


Drill  No.  16. 

COMMISSION  AND  SHIPPING  BUSINESS— Continued 
TRANSACTIONS  FOR  JOURNALIZING,  DECEMBER,   19- 


1.  A  fire  recently  occurred  in  our  pro- 
duce warehouse,  damage  as  adjusted 
$169.50,  of  which  $75  was  for  our  own  pro- 
duce and  the  remainder  for  goods  of  Con. 
No.  8.  We  receive  from  the  Continental 
Insurance  Co.,  a  check  for  the  full  amount. 

2.  We  send  to  the  consignors  our  ac- 
count sales  for  Con.  No.  8,  and  our  check 
on  First  Nat.  Bank,  Chicago,  for  $135.80, 
for  net  proceeds.  Our  commission  on  this 
consignment  is  $7,  and  our  charge  for  stor- 
age is  $1.75. 

3.  We  have  sent  A.  W.  Cook  &  Co.,  to 
be  applied  on  our  account,  a  sight  draft  on 
the  Union  Com.  Co.  for  $125. 

4.  We  have  shipped  to  the  Union  Com. 
Co.,  Chicago,  a  commission  consignment  of 
50  brls.  potatoes  @  $1.60,  and  15  tons 
baled  hay  @  $12.50,  paying  cash  for  dray- 
age,  $2.25. 

5.  Barnes  &  Dobson,  of  Chicago,  render 
account  sales  for  shipment  of  produce  re- 
cently sent  them,  reporting  proceeds, 
$92.60.  They  send  us  a  30  day  draft  on  L. 
Robinson  &  Co.  for  the  amount,  which  the 
latter  accept. 

6.  We  have  sold  to  the  Central  Pro- 
vision Co.  a  bill  of  flour  and  produce 
amounting  to  $159.75.  They  remit  to  us 
our  acceptance  in  favor  of  L.  Day  &  Co. 
for  $125,  assigned  to  them,  and  their  check 
for  balance. 

7.  The  Acme  Printing  and  Binding  Co. 
present  bill  of  $42.50  for  specially  manufac- 
tured blank  books,  to  be  used  in  our  office. 
We  hand  them  our  check  for  a  sum  sufficient 
to  cover  this  bill,  and  a  previous  balance  in 
their  favor  of  $61.20. 

8.  A.  W.  Snyder  &  Co.  render  an  ac- 
count sales  and  remit  their  check  for 
$125.70  and  their  acceptance  in  our  favor 
for  $235.40,  to  cover  the  net  proceeds  of 
our  shipment  to  them. 

9.  J.  W.  Nelson,  owner  of  the  ware- 
house rented  by  us,  presents  a  bill  for  one 
month's  rent,  $65.  We  hand  him  our  check 
for  the  amount  less  the  balance  due  on  his 
personal  account  to  date,  $21.40,  which  is 
passed  to  his  credit. 


10.  We  have  purchased  of  H.  B.  Brown 
12  shares  of  "Union  Insurance  Co."  stock  at 
$68.  He  takes  up  his  note  for  $360,  favor 
of  Chas.  Walker  and  assigned  to  us,  with  ac- 
crued interest,  $28.40,  and  we  give  our  check 
on  First  Nat.  Bank,  Chicago,  for  balance. 

11.  We  have  handed  to  L.  Mason,  City 
Treasurer,  our  check  for  City  Taxes  on  our 
stock  and  fixtures,  $291.75. 

12.  We  have  sold  to  A.  M.  Smith  &  Co. 
on  their  note  at  30  days,  goods  per  bill  ren- 
dered as  follows:  Mdse.  $309.45,  fruit 
(Con.  13)  $25.60,  fruit  (Con.  14)  $31.50. 

13.  A.  W.  Nellis  &  Co.  present  bill  for 
stationery  and  supplies,  etc.,  for  office  and 
store  as  follows:  Wrapping  twine  $2.70, 
ink  stand  75c,  stencil  outfit  (Shipping  De- 
partment) $2.50,  copying  press  $7.90,  ink 
$2.25,  mucilage  75c,  pen  racks  50c,  paper 
binders  25c,  rubber  bands  50c,  waste  paper 
baskets  $1.75,  paper  bags  $3.75.  The  bill 
is  paid  by  check. 

Note. — Let  the  student  use  his  careful  judgment 
as  to  the  distribution  of  this  bill  among  the  several 
accounts  carried. 

14.  A.  T.  Johnson  &  Co.  send  account 
sales  for  recent  shipment  to  them  with  their 
note  at  30  days  for  proceeds,  $81.60. 

15.  We  have  shipped  a  commission  con- 
signment to  A.  L.  Van  Ness  &  Co.,  Omaha, 
Neb.,  consisting  of  50  brls.  apples  at  $2.75 
(Mdse.)  and  40  boxes  oranges  (Con.  No. 
14)  at  $3.25,  paying  cash  for  drayage,  $1.75. 

16.  R.  M.  Day  &  Co.  report  account 
sales  of  our  recent  shipment,  proceeds 
$247.20.  They  send  us  our  note  previously 
given  in  their  favor  for  $150,  with  accrued 
interest  $14.20,  and  their  check  for  balance. 

17.  Paid  S.  Peters  cash  for  storage  of 
produce  in  his  warehouse  to  Jan.  1,  $17.60. 

18.  We  have  bought  on  account  of  A. 
L.  Sanderson  a  safe  for  use  in  our  Ship- 
ping Department,  $45. 

19.  We  have  received  from  the  Secre- 
tary of  the  Consolidated  Gas  Co.  a  check 
for  dividend  at  8  per  cent  on  15  shares  of 
that  stock  held  by  us. 

20.  A.  N.  Miller  settles  his  account  to 
date,  $126.90,  by  delivering  merchandise 
billed  at  $80,  and  his  note  at  30  days  for 
balance. 


JOURNALIZING  DRILLS  111 


Drill  No.  17. 

CORRECTION  ENTRIES 

The  accountant  should  understand  most  clearly,  that  nothing  in  the  way  of  erasures, 
crossing  out,  or  otherwise  obliterating  entries  is  to  be  tolerated  under  any  circumstances.  In 
the  case  of  an  error  in  computation,  the  nature  of  which  is  evident  by  the  data  given  in  the 
entry,  the  figure  or  figures  in  error  may  be  cancelled  by  a  light  stroke  of  the  pen  and  the  cor- 
rect figures  written  immediately  above,  the  correction  being  made  in  red  ink  and  in  such  a 
manner  as  not  to  render  illegible  the  corrected  figures.  To  a  thinking  student  the  reasons 
for  this  rule,  rigid  though  it  may  appear,  hardly  need  pointing  out.  It  should  be  evident  that 
no  reliability  can  be  placed  in  any  set  of  books,  wherein  the  accountant  has  indulged  in  the 
practice  of  altering  and  erasing  the  records  at  his  pleasure.  Furthermore,  such  a  set  of 
books  will  not  stand  for  a  moment  in  any  court  of  law. 

Cross  Entries.  The  general  method  of  correcting  a  wrong  entry,  or  of  re-adjusting 
an  entry  to  a  new  state  of  facts,  is  (with  the  exception  of  the  mere  clerical  errors  already 
alluded  to)  by  means  of  an  entirely  new  entry,  usually  known  to  the  bookkeeper  as  a  "cross 
entry.''  The  explanation  in  the  cross  entry  should  always  refer,  by  page  or  date  to  the  orig- 
inal entry  which  it  is  intended  to  correct,  and  some  kind  of  a  marginal  note,  as  "Void, 
Corrected  on  page — ,"  preferably  in  red  ink,  should  be  made  in  the  original  entry,  referring 
to  the  latter  entry  by  which  it  is  corrected.  This  will  render  the  correction  traceable  and  in- 
telligible to  an  auditor,  or  other  person  why  may  have  to  check  up  the  books. 

Offsetting  or  Adjusting  Entries  are  those  required  by  errors  in  billing,  failure  in  the 
delivery  of  goods,  dishonor  of  business  papers,  etc.  As  those  are  not  the  result  of  errors  in 
bookkeeping,  the  cross  references  in  red  ink  are  unnecessary.  A  general  rule  for  making 
these  corrections  and  adjustment  entries,  may  be  stated  thus : 

Make  such  debits  and  credits  in  the  adjustment  entry  as  will  correct  the  inequality  caused 
by  the  original  entry. 

Thus,  if  A,  through  any  cause,  as  shortage,  defect  in  goods,  etc.,  has  been  overcharged 
in  the  original  entry  for  merchandise  to  the  amount  of  $20,  the  adjusting  entry  must  credit 
him  and  debit  Mdse.  for  that  amount.  Or,  supposing  that  C.  Miller  is  charged  for  $25  worth 
of  goods  that  should  have  been  charged  to  R.  Smith,  the  adjusting  entry  would  be  "R.  Smith 
to  C.  Miller,  25." 

Reverse  Entry.  It  may  happen  that  the  bookkeeper  may  journalize  a  transaction  in- 
correctly, and  in  such  a  way  that  (if  the  entry  has  been  posted)  the  error  cannot  be  cor- 
rected by  a  mere  cross  entry.  Thus,  suppose  a  transaction  which  should  have  been  journal- 
ized "Mdse  to  Bills  Payable  $75.60,"  had  been  journalized  "Bills  Receivable  to  Mdse. 
$75.60"  and  that  the  wrong  entry  had  been  posted  to  the  ledger.  A  single  cross  entry  which 
would  set  the  books  right  is  not  feasible  here.  What  we  should  do  is  to  make  a  reverse  entry, 
that  is,  an  entry  which  reverses  or  neutralizes  the  incorrect  entry,  thus :  "Mdse.  to  Bills 
Receivable  $75.60."  This  entry  when  posted  leaves  the  books  as  they  were  before  the  error 
was  made,  and  it  now  only  remains  to  make  the  correct  entry  and  post  it. 

The  compound  reverse  entry  is  not  a  difficult  matter.  For  instance,  suppose  a  customer 
had  delivered  us  produce  in  payment  of  his  note  for  $50  with  accrued  interest  $3.75,  and  that 
instead  of  the  correct  entry,  the  bookkeeper  has  journalized  the  transaction  as  follows : 

Produce 50. 

Interest    3.75 

Bills  Payable.  53.75 

Several  errors  are  evident  in  this  entry,  but  the  cross  entry: 

Bills   Payable 53.75 

Produce  .....  50. 

Interest 3.75 

neutralizes  the  original  entry,  and  we  now  journalize  the  transaction  correctly  and  post  both 
entries  to  the  ledger.  We  should  write  the  word  "Void,  corrected  page  — "  in  red  ink  across 
the  original  entry,  and  after  the  reverse  entry,  the  explanation  "To  neutralize  void  entry 
page—." 

The  reverse  entry  merely  debits  the  account  or  accounts  that  were  credited  in  the  incor- 
rect entry  and  corrects  those  that  were  debited  and  for  the  same  amount. 


112 


ADVANCED  ACCOUNTING 


TRANSACTIONS  FOR  JOURNALIZING,  OCTOBER,  19— 


1.  C.  H.  Stone  &  Co.  have  called  atten- 
tion to  an  error  in  our  bill  of  Aug.  21,  in 
which  we  charge  them  24  cents  per  pound 
for  250  lbs.  butter  instead  of  22^4  cents, 
the  agreed  price.  We  send  memorandum 
of  credit  for  the  amount. 

Note. — In  cases  of  this  kind,  if  the  bill  has  not 
been  paid,  it  is  customary  to  send  the  customer  a 
"Memorandum  of  Credit"  or  itemized  statement,  as 
"250  lb.  butter,  at  V/z  cts.  (overcharge),  $3.75,"  and 
credit  the  customer's  account,  at  the  same  time 
debiting  the  property  account.  If  the  bill  has  been 
paid,  the  cash  may  be  remitted,  the  cash  account,  of 
course,  being  credited. 

2.  We  have  received  from  A.  W.  Nel- 
son &  Sons,  memo,  of  credit  for  15  cases 
canned  corn  at  $2.50,  which  we  found  un- 
salable and  returned. 

3.  The  Consumers'  Coal  Co.  hand  us  a 
check  for  $25  as  a  rebate  on  a  lot  of  coal  re- 
cently purchased  from  them  for  cash,  and 
which  proved  of  inferior  quality.  The  coal 
had  been  charged  to  Expense. 

4.  Through  our  error,  C.  W.  Miller  & 
Co.  were  charged  iy2  c  per  lb.  on  275  lbs. 
N.  Y.  Cheese  recently  sold  them,  instead  of 
17>^c,  the  market  price.  We  have  called 
their  attention  to  the  error  and  have  sent 
them  a  corrected  bill. 

5.  Stacey  &  Dean  call  our  attention  to 
an  error  in  their  favor  on  a  bill  of  flour  re- 
cently purchased  of  them  for  cash.  The 
bill  was  for  20  brls.  XX  at  $4.50,  and  30 
brls.  XXX  at  $5.25 ;  whereas  the  goods  de- 
livered consisted  of  "20  brls.  XXX"  and 
"30  brls.  XX."  We  remit  our  check  for  the 
amount  of  the  overcharge. 

6.  On  Sept.  30  we  gave  our  check  to  S. 
Hill  for  $79.50,  rent  to  date  for  the  storage 
warehouse  at  No.  15  Main  St.,  which  we 
charged  to  Expense.  It  has  been  found  that 
an  error  was  made  in  the  rent  computation, 
and  that  the  amount  due  was  $86.25.  We 
hand  him  a  check  for  the  discrepancy. 

7.  We  have  reported  an  error  of  $17.60 
in  our  favor  in  an  account  sales  recently  sent 
us  with  cash  remittance  by  the  Union  Com. 
Co.    They  send  us  check  for  the  amount. 

8.  Belden  &  Stowe  call  our  attention  to 
an  error  in  our  account  sales  of  Con.  19,  in 
which  we  charged  them  $26.50  for  commis- 
sion, instead  of  $23.40,  the  correct  amount. 
As  the  proceeds  were  credited  to  their  ac- 
count we  send  them  mem.  of  credit  for  the 
error. 


Query. — Is  the  balance  of  the  account  with  Con. 
19  affected  by  the  error? 

9.  Ames  &  Allen  report  shortage  and 
breakage  amounting  to  $11.20  in  a  bill  of 
crockery  recently  sold  them  on  account.  We 
send  them  mem.  of  credit  for  amount. 

10.  We  recently  gave  our  check  in  pay- 
ment of  our  note,  favor  of  H.  C.  Bowen,  for 
$75  and  accrued  interest  $14.20.  It  is  now 
found  that  the  computation  of  interest  was 
wrong,  and  that  we  should  have  paid  but 
$11.15.  Mr.  Bowen  directs  us  to  charge 
the  amount  of  the  error  to  his  account. 

11.  George  Dubois  recently  paid  his 
note  in  our  favor  for  $45,  with  accrued  in- 
terest $7.20,  by  delivering  to  us  5  tons  of 
hay  for  our  delivery  team.  It  is  now  found 
that  there  was  an  excess  of  $2.15  in  the 
interest  charge,  which  amount  we  credit  to 
his  account. 

12.  In  remitting  on  Sept.  29  for  a  bill  of 
Mdse.  purchased  of  Armstrong  &  Co.,  on 
account,  we  sent  them  a  check  for  $79.10 
instead  of  $71.90.  They  notify  us  of  the 
error  and  that  they  have  passed  the  amount 
to  our  credit.  The  correct  entry  was  made 
on  our  books  at  the  time,  the  error  being 
merely  a  clerical  one  in  making  out  the 
check. 

Note. — Had  the  error  been  discovered  by  Arm- 
strong &  Co.  before  the  check  was  deposited  in  bank 
it  would  have  been  returned  to  us  for  correction. 
Otherwise,  a  check  for  the  discrepancy  might  be 
sent,  or,  in  the  case  of  an  open  account,  a  mem.  of 
credit  or  a  mere  notification  by  letter. 

13.  George  Stillwell  settled  his  account 
with  us  by  note  at  30  days  in  accordance 
with  our  statement  rendered  for  $72.50,  and 
we  deposited  the  note  in  bank,  receiving 
credit  thereon.  It  is  now  discovered  that 
our  statement  of  his  account  was  wrong  and 
that  he  owed  us  but  $64.25.  It  is  arranged 
that  he  is  to  pay  the  note  at  maturity  and 
receive  credit  for  the  discrepancy. 

14.  A  bill  of  flour  amounting  to  $29.50 
which  we  sold  on  account  to  Chas.  A. 
Smith,  was  erroneously  charged  to  the  ac- 
count of  C.  M.  Smith.  C.  M.  Smith  after- 
wards settled  his  account  in  cash,  but  later 
discovered  the  error,  upon  which  we  hand 
him  our  check  for  the  amount. 

Note. — Chas.  A.  Smith  must  be  charged  with  an 
itemized  bill  of  the  goods,  as  they  were  delivered  to 
him.  But  what  account  should  be  credited  in  the 
adjustment  entry,  and  why? 


JOURNALIZING  DRILLS 


113 


15.  On  Aug.  21,  C.  Halliday  settled  his 
account  by  giving-  us  his  30  day  acceptance 
for  $74.60.  The  transaction  was  journal- 
ized, "Bills  Pay.  to  C.  Haliiday  $74.60," 
and  the  entry  was  afterwards  posted.  What 
adjustment  entry  is  now  necessary. 

16.  C.  S.  Walker  returns  a  statement  of 
account  recently  sent  him,  calling  our  atten- 
tion to  the  fact  that  a  charge  for  3  dozen 
cans  tomatoes  @  $1.10  and  a  sack  of  flour 
@  $1.65  is  erroneous,  and  that  these  items 
were  not  purchased  by  him.  On  investiga- 
tion, it  is  found  that  these  goods  should  have 
been  billed  and  charged  to  C.  A.  Walters. 

17.  On  July  3,  we  sold  to  N.  S.  Hill,  on 
his  note  at  30  days,  5  shares  of  "Union 
Copper"  at  82.  An  entry  was  made  "Stocks 
to  Bills  Payable  $410"  and  this  entry  was 
posted. 

18.  A.  P.  Harper,  our  produce  pur- 
chasing agent,  recently  rendered  an  account 
for  goods  purchased  and  delivered,  "$790 
with  commission  at  5  per  cent,  $26.50." 
We  handed  him  our  check  for  the  commis- 


sion as  charged,  but  Mr.  Harper  has  discov- 
ered the  error  and  asks  for  an  additional 
check  to  adjust  the  account,  which  is  now 
given  him. 

19.  We  owed  Carter,  French  &  Co.,  for 
goods  purchased  amounting  to  $240.60  sub- 
ject to  a  discount  of  6  per  cent.  Through  a 
misapprehension  of  the  rate,  we  deducted 
10  per  cent,  remitted  our  check  for  the  net 
amount,  and  closed  the  account.  Our  atten- 
tion being  called  to  the  error,  we  send  them 
our  che^k  to  cover  the  excess  of  discount 
deducted. 

20.  On  Aug.  10,  we  settled  our  account 
to  date  with  Hall  &  Davis  by  remitting  our 
acceptance  at  30  days  for  $173.65.  An  error 
has  been  found  in  H.  &  D.'s  statement,  the 
balance  at  that  time  being  but  $161.15.  They 
return  the  acceptance  for  correction,  and  we 
send  them  another  for  the  correct  amount. 

Note. — The  accounts  could  be  adjusted  by  an  entry 
debiting  Hall  &  Davis  and  crediting  Bills  Payable 
for  the  amount  of  the  error ;  but  as  this  would  make 
entries  difficult  to  trace  in  adjusting  the  books,  it  is 
better  to  reverse  the  original  entry  and  then  make 
the  proper  entry  when  the  new  acceptance  is  issued. 


Drill  No.  18. 


CORRECTION  ENTRIES,  ETC.— Continued 
TRANSACTIONS   FOR  JOURNALIZING,  NOVEMBER,   19— 


1.  The  Merchants  Bank  notifies  us  that 
a  personal  check  in  our  favor  for  $62.75, 
given  us  by  H.  C.  Green,  Evanston,  111.,  and 
afterwards  deposited  with  the  bank,  has 
been  returned  unpaid  on  account  of  "no 
funds"  in  the  bank  on  which  it  was  drawn. 
The  protest  fees  are  $1.75.  We  hand  the 
bank  our  check  for  the  amount  of  check  and 
fees.     (Use  the  title  "Dishonored  Paper.'') 

Note. — Checks    are    usually    protested    when    the 
payee  and  drawer  live  in  different  states. 

2.  On  Oct.  21,  we  discounted  at  the 
Merchants  Bank,  J.  P.  Harper's  acceptance 
for  $175,  the  proceeds  less  discount,  $3.50, 
being  placed  to  our  credit.  The  transaction 
was  erroneously  entered  as  follows : 

Cash    171.50 

Interest    3.50 

Bills  Pay.  . .  .  175.00 

This  entry  was  posted  and  passed  through 
the  books.  The  necessary  cross  entry  and 
corrections  should  now  be  made. 

3.  A.  C.  Kennedy  &  Co.'s  note  for  $245 
with  interest,  $17.20,  due  Nov.  1,  which  we 


deposited  for  discount  at  the  First  Nat. 
Bank,  Chicago,  on  Sept.  22,  .has  been  dis- 
honored and  returned  to  us.  We  send  the 
bank  our  check  for  the  amount  plus  protest 
fees,  $1.50. 

Note. — The  accounts  with  Bills  Rec.  and  Interest 
are  not  affected,  we  merely  charge  "Dishonored 
Paper,"  and  credit  the  bank. 

4.  On  Aug.  28,  we  credited  Con.  17  with 
a  sale  of  goods  amounting  to  $21.60,  which 
should  have  been  credited  to  Con.  19. 

5.  H.  C.  Green  has  sent  us  a  Chicago 
draft  for  $64.50  for  his  check  (with  protest 
fees)  returned  to  us  dishonored,  on  the  1st 
inst.  Mr.  G.  Explains  that  he  was  out  of 
the  city  at  the  time  the  check  was  presented 
for  payment,  and  was  not  aware  that  his 
bank  balance  was  so  low. 

6.  .  On  October  21,  R.  Wilson  settled  his 
account  per  our  statement  rendered  for 
$176.20  by  giving  his  acceptance  at  60  days. 
An  error  has  been  found  in  the  statement, 
the  true  balance  of  the  account  being  but 
$147.15.  We  remit  our  check  for  the  dis- 
crepancy. 


114 


ADVANCED  ACCOUNTING 


7.  H.  C.  Wells  &  Co.,  to  whom  we  rend- 
ered an  account  sales  of  Con.  18,  call  our 
attention  to  an  error  in  computing  the  sales 
bv  which  we  credited  the  consignment  with 
$242.60  instead  of  $342.60.  We  had  sent 
them  our  check  for  proceeds.  Our  commis- 
sion charge  is  5  per  cent.  The  original 
entry  by  which  this  consignment  was  closed 
was  as  follows : 

Con.  18   242.60 

Con.  Com 12.13 

Storage   6.40 

Cash  224.07 

We  make  the  necessary  adjustment  entry 
and  remit  our  check  to  the  consignors  for 
the  discrepancy. 

Note. — As  the  errors  in  this  original  entry  are 
merely  the  result  of  a  wrong  computation,  a  reverse 
entry  is  unnecessary.  The  proper  adjustment  is  ef- 
fected by  simply  debiting  "Con.  18"  for  the  error  in 
sales  and  crediting  "Cash"  for  the  amount  of  the  re- 
mittance, and  "Con.  Commissions"  for  the  increased 
commission. 

8.  A.  P.  Jones  recently  paid  his  note  in 
our  favor  for  $76.50  and  accrued  interest 
$18.90.  The  interest  computation  was  er- 
roneous and  should  have  been  $12.40.  We 
remit  our  check  on  First  Nat.  Bank,  Chi- 
cago, for  the  overcharge. 

9.  A.  C.  Porter  &  Co.  recently  sent  us 
an  account  sales  for  a  shipment  of  potatoes, 
the  net  proceeds  of  which  amount  to 
$340.60.  We  have  found  an  error  in  their 
extensions,  which  shows  that  the  net  pro- 
ceeds should  have  been  $410.30.  They  send 
us  a  mem.  of  credit  for  the  amount  of  the 
error. 

10.  An  invoice  .of  crockery  amounting 
to  $372.90  which  we  recently  purchased  of 
Falkner  Bros.,  on  our  acceptance  at  30  days, 
proved  to  be  not  up  to  sample,  and  we  have 
demanded  a  rebate  of  $25  which  they  have 
allowed,  sending  us  a  mem.  of  credit  for 
that  amount. 

11.  On  October  23,  C.  H.  Hopper  sent 
us  a  check  for  $75.60  to  pay  for  a  bill  of 
Mdse.  purchased  of  us  Sept.  26,  for  that 
amount.  Mr.  Hopper  now  puts  in  a  claim 
for  our  regular  30  day  discount  of  6  per 
cent,  which  we  allow,  sending  a  mem.  of 
credit  for  the  amount. 

12.  On  Sept.  24,  we  purchased  an -office 
chair  for  cash,  $16.50,  which  was  charged 
to  Expense,  instead  of  to  Office  Fixtures, 
and  the  entry  was  posted.  It  is  now  cor- 
rected by  a  cross  entry. 


13.  WTe  recently  sent  a  check  on  the 
First  Nat.  Bank,  Chicago,  to  settle  our  bal- 
ance in  favor  of  H.  C.  Moore  &  Co.  for 
$146.75.  By  a  mistake  of  the  cashier,  our 
check  was  drawn  for  $175.46  and  so  entered 
on  our  books.  H.  C.  Moore  &  Co.  have  re- 
mitted us  their  check  for  the  excess. 

14.  In  sending  a  commission  shipment 
of  eggs  to  Hall  &  Co.,  we  charge  the  "Ship- 
ments" account  with  70  cases  of  eggs  at 
$3.20,  instead  of  90  cases,  the  quantity 
shipped. 

15.  We  have  reported  a  shortage  of  3 
cases  of  canned  corn  billed  at  $1.95  per  case, 
in  a  recent  invoice  of  Mdse.  purchased  of 
Hanna  &  Co.  on  account,  and  they  send  us 
a  mem.  of  credit  for  the  amount. 

16.  We  recently  paid  with  our  check 
our  note,  favor  Day  &  Co.  for  $450  with  in- 
terest $25,  and  the  bookkeeper  made  the 
entry : 

Bills  Receivable 425 

Interest    50 

Cash    475 

and  the  entry  in  this  form  was  passed 
through  the  books.  We  make  necessary  cor- 
rection entries. 

17.  On  Oct.  26,  we  discounted  our  note 
at  the  Merchants  Bank  for  $250,  and  re- 
ceived credit  for  the  proceeds  less  60  days 
bank  discount  at  6  per  cent.  It  was  after- 
ward discovered  that  the  discount  was 
charged  to  "Discount"  instead  of  to  "In- 
terest."   The  correction  entry  is  now  made. 

18.  On  Oct.  31,  A.  P.  Crane  settled  his 
account  with  his  acceptance  at  60  days  for 
$224.60.  The  transaction  was  inadvertently 
journalized  "A.  P.  Crane  to  Bills  Payable 
$224.60."  Make  necessary  entries  for  cor- 
rection. 

19.  C.  B.  Hale  &  Co.  recently  rendered 
us  a  statement  for  balance  of  account, 
$273.80,  and  we  settled  Oct.  29,  by  giving 
them  our  note  at  30  days.  An  error  has 
since  been  discovered  in  the  statement  which 
should  have  been  for  a  balance  of  $259.40. 
They  return  the  note  and  we  issue  another 
for  the  correct  amount. 

20.  A  bill  of  produce  amounting  to 
$7.90,  which  was  sold  and  delivered  to  N. 
P.  Wilson  on  Oct.  28,  was  charged  to  the 
account  of  S.  P.  Williams.  Mr.  Williams 
paid  his  bill  without  noticing  the  incorrect 
charge,  but  discovered  it  later,  and  we  gave 
him  our  check  for  the  amount. 


flercantile  Terms. 


We  have  not  attempted  to  give  a  dictionary  of  all  the  terms  in  use,  but  have  selected  a 
list  of  the  more  common  words  and  phrases,  and  such  as  would  seem  of  special  utility  to  those 
preparing  for  business;  nor  have  we  given  all  the  definitions  that  belong  to  these  words.  It  has 
been  our  study  to  select  only  those  definitions  that  apply  particularly  to  the  commercial  use  of 
each  term  or  phrase. 

It  would  be  well  to  use  these  lists  as  lessons  for  oral  and  written  spelling  and  definition, 
until  the  scholar  can  write  correctly  and  use  correctly  each  word  in  the  list. 


A  CCEPT. — To  agree  to  pay  a  draft  at  maturity. 

Acceptance. — An  agreement  by  signature  to  pay  a  draft 
or  bill  according  to  its  terms.  Also  the  term  ap- 
plied to  the  bill  after  being  accepted. 

Accommodation. — The  loan  of  money  or  of  one's  name 
merely  as  a  favor. 

Accommodation  Paper. — Notes  or  bills  given  without 
actual  indebtedness  or  consideration,  to  be  used  for 
the  accommodation  of  some  other  person. 

Account. — The  arrangement  of  debits  and  credits  un- 
der the  name  of  a  person  or  some  appropriate  title. 

Accountant. — One  skilled  in  the  art  of  keeping  ac- 
counts. 

Account  Current. — A  running  account.  A  detailed 
statement  of  the  transactions  between  two  persons 
or  firms,  usually  expressed  in  the  form  of  debtor  and 
creditor 

Account  Sales. — An  itemized  statement  of  sales  and  ex- 
penses, sent  by  a  commission  merchant  to  his  prin- 
cipal. 

Accrued— Interest  accumulated  and  unpaid. 

Acknowledgement. — A  formal  admission  made  before 
an  officer,  that  the  act  described  was  voluntarily 
done.  The  officer's  certificate  of  the  admission  is 
also  called  an  acknowledgement. 

Actuary. — An  officer  of  life  insurance  companies,  skilled 
in  computing  annuities. 

Adjustment. — A  general  settlement;  usually  of  a  loss,  or 
of  a  disputed  account. 

Administrator. — One  that  is  legally  appointed  to  settle 
an  estate. 

Adulteration. — The  act  of  mixing  spurious  articles 
with  a  genuine  commodity. 

Ad  Valorem. — According  to  value.  A  custom  house 
term,  relating  to  the  estimating  of  duties  upon  the 
value  of  imported  goods. 

Advance. — Increase  in  prices.  Money  paid  on  goods 
before  their  delivery. 

Adventure. — A  shipment  of  goods  to  be  sold  on  the 
shipper's  risk. 

Advice. — Information  or  counsel  given,  usually  relative 
to  the  sale  or  purchase  of  goods. 

Affidavit. — A  written  declaration  under  oath. 

Agent.— One  who  acts  for  another,  usually  in  the  tran- 
saction of  business. 

Allowance. — A  deduction  made  for  various  reasons.  A 
*  stipulated  sum  granted  to  a  person. 

Annuity. — A  sum  of  money  payable  at  stated  periods. 

Ante-date. — To  date  before  the  present  time. 

Appraisal. — The  act  of  placing  a  value  on  goods. 

Appraiser. — One  who  makes  the  appraisal. 


Appurtenance. — A  minor  improvement,  a  right  or  a 
privilege  belonging  to  any  property  and  passing 
with  it  from  one  owner  to  another. 

Arbitration. — The  adjustment  of  a  disputed  point  by 
a  person  or  persons  chosen  by  the  parties  in  dispute. 

Arrears. — Dues  not  paid  at  maturity. 

Assess. — To  value  property  for  the  purpose  of  taxation. 
To  levy  a  tax. 

Assessor. — One  who  values  the  property. 

Assets. — Property  values  or  resources  of  any  kind. 

Assignee. — A  person  to  whom  the  property  of  a  bank- 
rupt or  an  insolvent  debtor  is  transferred  for  the 
benefit  of  the  insolvent's  creditors. 

Assignment. — The  act  of  transfering  property  to  the  as- 
signee. 

Assignor. — One  who  makes  an  assignment. 

Assortment. — A  variety  of  sorts  or  kinds. 

Assume. — To  become  liable  for  the  promises  of  another. 

Assure. — The  same  as  insure,  which  is  written  more 
frequently. 

Attachment. — A  warrant  for  the  purpose  of  seizing  a 
man's  person  or  property. 

Attorney. — A  lawyer.  An  agent  usually  appointed  by 
written  authority  under  seal,  and  called  an  attorney 
in  fact. 

Auction. — A  sale  to  the  highest  bidder. 

Auctioneer. — One  who  sells  at  auction. 

Audit. — To  examine  and  prove  accounts. 

Auditor. — An  officer  appointed  by  government,  state  ot 
county,  or  by  any  corporation,  to  examine  claims 
upon  the  treasury,  and  to  investigate  the  treasurer's 
accounts. 

Auxiliary, • — Applied  to  various  account  books  that  are 
kept  as  aids  to  the  principal  books. 

Avails. — The  proceeds  of  property  sold. 

Average. — An  apportionment  of  a  loss  at  sea  amonj 
those  interested  in  ship  and  cargo.  The  mean  time 
of  payment  for  several  debts  due  at  differen'  times. 

Avoirdupois. — The  common  standard  of  weight  for  all 
articles  except  the  precious  metals  and  medicines. 

BAIL. — Surety  for  another;  especially,  surety  for  his 
presence  on  trial  at  a  stated  time. 

Bailment. — A  delivery  of  goods  to  be  held  in  trust. 

Balance. — A  term  used  to  denote  the  difference  be- 
tween the  sides  of  an  account. 

Balance  of  Trade. — The  difference  between  the  value 
of  the  imports  and  exports  of  any  country. 

Bank-book. — A  pass-book  carried  by  a  depositor,  n 
which  the  teller  of  a  bank  records  deposits,  and  in 
which  the  book-keeper  enters  the  paid  checks  at 
stated  intervals,  usually  at  the  end  of  each  month. 


-115— 


116 


ADVANCED  ACCOUNTING 


Bank-Bills  or   Notes. — Promissory  notes  issued  by 

banks,  payable  on  demand,  and  used  as  money. 
Bankrupt.— One  who  is  unable  to  pay  his  debts,  and 

who  fails  in  business. 
Bears. — Dealers  in  stocks  and  other  commodities,  who 

endeavor  to  bear  down  or  diminish  the  prices. 
Bill. — A  statement  in  writing,  as  a  list  of  items  bought 
or  sold,  or  of  services  rendered.     The  common  term 
applied  to  a  note  or  draft. 
Bill   of   Exchange. — An  order    for   the   payment    of 
money,  usually  drawn  on  a  person  or  firm  located 
in  a  foreign  country,    the  term  draft  being  used  to 
designate  bills  that  are  payable  in  the  same  country 
in  which  they  are  drawn. 
Bill  of  Lading. — A  written  account  of  goods   shipped 
and  the  conditions  of  shipment,   having  the  signa- 
ture of  the  carrier's  agent,  and  given  to  the  shipper 
as  a  receipt. 
Bill  of  Sale. — A  writing  given  by  the  seller  to  the 
buyer,  transferring  the  ownership  of  personal  prop- 
erty. 
Bills   Rkceiyable. — Other   people's  notes  and  drafts 

due  us. 
Bills  Payable. — Our  notes  and  acceptances   due   to 

other  people. 
Board  of  Trade. — An  association  of  business  men  for 
the  regulation  and  advancement  of  commercial  in- 
terests. 
Bona  Fide. — In  good  faith. 

Bond. — A  written  instrument  under  seal,  by  which  the 
party  executing   the   bond   binds   himself  and   his 
heirs  to  the  fulfillment  of  certain  stipulations. 
Bonded  Cars. — Cars  containing  imported  goods  under 

seal,  on  which  the  duty  has  not  been  paid. 
Bonded  Goods. — Those  which  are  stored  in  a  bonded 
warehouse,   or  in  bonded  cars,   the  owner  having 
given  bonds  securing  the  payment  of  import  duties 
or  of  internal  revenues,  upon  their  removal  or  their 
arrival  at  some  inland  city  of  entry,  and  before  a 
specified  time. 
Bonded  Warehouses. — Warehouses  where   goods  are 
stored  under  bonds  securing  payment  of  duties  or 
revenues. 
Bonus. — A  premium  given  on  a  loan,  or  for  any  favor 

shown. 
Broker. — An  agent  who  effects  sales  or  purchases,  or 
who  makes  loans  and  contracts  for  another.  Also 
a  term  applied  to  one  who  deals  in  stocks.  A 
broker  does  not  usually  have  possession  of  the  prop- 
erty which  he  sells  or  buys  as  agent. 
Brokerage.— A   percentage   charged   by   a  broker   for 

transacting  business  for  another  person. 
Bullion. — Uncoined  gold  or  silver. 
Bulls.— Dealers  who  operate  to  raise  the  price  of  stocks 

or  other  commodities. 
Business. — Exchange  of  commodities  and  of  commer- 
cial values.     Also  a  term  representing  one's  occupa- 
tion. 

/^APITAL. — The  investment  in  business. 

Cargo. — The  freight  of  a  vessel. 

Cashier. — The  officer  who  has  charge  of  the  finances  of 
any  business.     The  executive  officer  of  a  bank. 

Carrier. — One  who  conveys  goods  for  others. 

Certificate. — A  written  voucher  attesting  to  some  fact; 
as  a  certificate  of  deposit,  a  certificate  of  stock. 

Certified  Check. — One  which  has  been  certified  or  ac- 
cepted by  the  bank  on  which  it  is  drawn,  making 
the  bank  responsible  for  its  payment. 

Charter. — A  paper  from  government  defining  the  rights 
and  privileges  of  corporations.  To  hire  or  let  an 
instrument  of  transportation;  as  a  ship,  a  railway 
car. 

Chattel. — Any  kind  of  property  except  real  estate. 
Examples:  merchandise,  notes  and  accounts,  ani- 
mals, leases  of  real  estate,  etc. 


Check. — An  order  on  a  bank  drawn  by  a  depositor. 

Clearance. — A  custom  house  officer's  certificate,  show- 
ing that  a  vessel  has  been  cleared,  and  has  permit 
to  sail. 

Clearing  House. — The  place  where  banks  make  ex- 
change of  drafts  and  checks,  and  settle  balances. 

Codicil. — A  supplement  to  a  will. 

Coin. — A  piece  of  metal  impressed  with  the  government 
stamp,  and  used  as  money. 

Collaterals. — Pledges  of  stocks,  notes  or  chattels,  for 
security  on  loans  and  other  indebtedness. 

Commerce. — Exchange  of  commodities 

Commercial  Paper. — Bills  of  exchange,  drafts  and  notes 
given  in  the  course  of  trade. 

Commission. — A  percentage  given  for  the  sale  or  pur- 
chase of  goods,  or  the  transaction  of  other  business. 

Commodity. — A  term  relating  to  everything  movable 
that  is  bought  and  sold.  Examples:  goods,,  wares, 
merchandise,  the  products  of  lands  and  manufact- 
ures. 

Common  Carrier. — One  who  for  pay  engages  to  trans- 
port goods  for  any  person  who  chooses  to  employ 
him. 

Common  Law. — Law  based  upon  the  precedent  of  usage, 
and  not  contained  in  the  statutes  enacted  by  legisla- 
tive bodies. 

Compact. — An  agreement  or  contract  between  parties. 

Company. — A  corporation.  A  term  used  in  a  firm  name 
to  designate  other  partners  whose  names  are  not 
given. 

Compromise. — To  settle  a  claim  by  paying  or  receiving 
only  a  part  of  the  amount.  To  agree  upon  a  settle- 
ment based  upon  mutual  concessions. 

Consideration. — The  material  cause  of  a  contract.  The 
thing  promised,  cr  the  reason  for  the  promise. 

Consignee. — One  to  whom  goods  are  sent. 

Consignment. — Merchandise  consigned  to  an  agent  to 
be  sold. 

Consignor. — One  who  sends  or  consigns  the  merchan 
dise. 

Consols. — The  chief  public  stock  of  England,  bearing 
3  per  cent  interest. 

Consul. — An  agent  for  a  government,  residing  at  a  sea- 
port in  a  foreign  country,  and  guarding  the  com- 
mercial interests  of  his  own  country. 

Contra. — On  the  opposite  side. 

Contraband. — Unlawful.  Articles  prohibited  from  be- 
ing bought  or  sold. 

Contract. — An  agreement  based  on  a  consideration,  to 
do  or  not  to  do  a  certain  thing. 

Copartnership. — The  joining  of  two  or  more  persons 
into  one  firm  for  the  purpose  of  carrying  on  any 
enterprise.  It  has  the  same  meaning  as  partner- 
ship. 

Copyright. — The  right  granted  by  government  to  an 
author  to  control  the  publication  of  any  book  or 
work. 

Corporation. — A  number  of  persons  associated  togeth- 
er, composing  a  firm  for  conducting  any  enterprise 
specified  in  their  charter. 
Correspondence. — An  interchange'of  letters. 
Correspondents. — Banking  firms  and  collection  agen- 
cies with  whom  a  bank  has  accounts,  are  called  its 
correspondents. 
Counterfeit. — A  spurious  bank  bill;  a  forgery. 
Countersign. — To  sign  as  a  subordinate  officer. 
Coupon. — An  interest  note  or  a  certificate  attached  to  a 
bond,  which  is  cut  off  from  the  bond  and  collected 
when  due. 
Coupon  Bonds. — Bonds  with  interest  coupons  attached. 
Covenant. — A  mutual  agreement  under  seal. 
Credentials. — Testimonials  giving  authority. 
Credit.- — Trust  given  to  a  debtor.     Mercantile  reputa- 
tation  entitling  one  to  be  trusted.     The  side  of  an 
account  on  which  we  enter  all  values  received  from 
the  party  represented  by  the  title. 
Creditor. — One  giving  credit;  one  whom  we  owe. 


MERCANTILE  TERMS 


117 


Currency. — Paper  money  as  distinguished  from  coin. 

In  a  broader  sense,   the  entire  volume  of  money  in 

circulation. 
Custom  House. — A  place  where  government  duties  are 

collected. 
Customs. — Taxes  or  duties  levied  by  government  upon 

goods  imported  or  exported. 

DAYS  OF  GRACE.— An  extension  of  time,  usually 
three  days,  after  a  written  obligation  becomes  'Vie. 

Debit. — An  entry  on  the  debtor  side  of  an  account. 

Debt. — An  amount  due  from  one  to  another. 

Debtor. — One  owing  a  debt. 

Decimal. — That  which  increases  and  decreases  by  tens. 

Deed. — A  written  contract  under  seal,  usually  transfer- 
ring the  ownership  of  real  estate. 

Defalcation. — Deduction  or  discount.  Embezzlement 
of  money  by  an  officer  having  it  in  charge. 

Defaulter. — One  who  fails  to  account  for  money  and 
property  entrusted  to  him. 

Delivery. — The  passing  of  money  or  goods  to  another. 

Deposit. — To  commit  to  the  care  of  another;  especially 
to  place  money  in  bank  subject  to  our  order. 

Depositary. — One  to  whom  something  is  entrusted. 

Deputy. — A  person  appointed  to  act  for  another. 

Diplomacy. — The  art  of  conducting  negotiations  with 
foreign  governments. 

Discount. — An  allowance  for  payment  of  a  debt  before 
it  is  due.  A  sum  prepaid  as  interest  for  the  advance 
of  money.  To  buy  a  note  or  account  for  less  than 
its  full  amount. 

Dishonor. — A  failure  to  pay  an  obligation  when  due.  A 
failure  to  accept  a  draft  when  presented  for  accept- 
ance. 

Dividend. — The  portion  alloted  to  each  stockholder  in 
the  division  of  profits. 

Donor. — One  who  gives  or  bestows  a  gift. 

Dormant. — Referring  to  a  partner  who  takes  no  share  in 
the  public  management  of  a  business,  hence  not 
named  in  the  firm,  but  who  shares  in  the  gains  and 
losses. 

Dower. — The  right  of  a  widow  to  a  life  interest  in  one- 
third  of  all  the  real  estate  owned  by  her  husband  at 
any  time  after  their  marriage. 

Draft. — An  order  on  an  individual  or  a  firm  for  the  pay- 
ment of  money. 

Drawee. — One  to  whom  the  draft  is  directed. 

Drawer. — The  party  drawing  the  draft  and  ordering 
payment. 

Due-Bil^. — A  brief,  written  acknowledgement  of  a  debt, 
having  the  effect  of  a  promissory  note. 

Duplicate. — An  exact  copy  of  anything. 

Duress. — Personal  restraint,  or  fear  of  personal  injury. 

Duties. — Taxes  levied  by  the  government  on  imports, 
and  sometimes  on  exports. 

EARNEST. — Part  of  purchase  money  paid,  or  part  of 
goods  delivered  to  bind  a  verbal  contract. 
Effects. — Property  of  any  kind. 
Embargo. — A  government  order  prohibiting  ships  from 

sailing  from  any  port. 
Embarrassment. — Financial  difficulty. 
Embezzlement. — A  fraudulent  appropriation  of  money 

entrusted  to  one's  care. 
Emporium. — A  commercial  center. 
Endorse,  or  Indorse. — To  write   one's  name   on  the 

back  of  a  commercial  paper.     To  receipt  a  partial 

payment  on  the  back  of  a  note  or  bill. 
Endorser,  or  Indorser. — The  person  who  writes  his 

name  on  the  back  of  a  commercial  paper. 
Endorsement. — See  Indorsement. 
Engross. — To  copy  in  manuscript. 

Entry. — The  record  of  a  business  transaction  in  an  ac- 
count book. 
Equation. — The  process  of  equalizing  or  averaging. 
Equity. — The  science  of  right  and  justice,  which  often 

corrects  the  application  of  law  in  a  particular  case. 


Exchange. — The  giving  of  one  value  for  another.  Tha 
process  of  remitting  money  values  by  means  of  bills 
and  drafts.  The  discount  or  premium  arising  from 
the  purchase  or  sale  of  different  classes  of  paper. 

Execution. — A  written  direction  given  to  an  officer,  au- 
thorizing him  to  enforce  a  judgment.  The  act  of 
signing  and  sealing  a  legal  iustrument. 

Executor. — One  appointed  by  will  to  settle  the  estate 
of  a  person  deceased. 

Exports  — Articles  sent  out  of  the  country. 

Extension. — An  agreement  between  debtor  and  creditor, 
postponing  the  time  of  payment  of  a  debt. 


FABRIC. — Any    manufactured  cloth;    as,    cotton    or 
woolen  fabrics. 
Face. — The  amount  expressed  on  a  bill  or  note. 
Factor. — An  agent  to  whom  goods  are  consigned  for 

sale. 
Fac  Simile. — An  exact  copy. 
Failure. — The  act  of  becoming  insolvent. 
Favor. — A  complimentary  term  applied  to  a  letter  re- 
ceived.    A  note  or  bill  is  said  to  be  in  favor  of  the 

payee. 
Fee  Simple. — The  absolute  ownership  of  real  estate. 
Finance. — The  revenue  of  a  state.     Public  money. 
Financier. — One  having  charge^of  the  public  revenues. 

One  skilled  in  money  matters. 
Firm. — A  general  title  of  partnership,  or  of  a  business 

house. 
Fiscal. — Pertaining  to  the  public  treasury  or  revenue. 

As,   the  fiscal  year,  meaning  the  financial  year  as 

reckoned  by  the  department  of  finance. 
Fixtures. — The  furnishings  of  a  store  or  office  that  are 

not  movable. 
Flat. — A  term  applied  to  stocks  that  are  dull  of  sale. 
F.  O.  B. — Free   on  Board.     A   term   used  on  invoices 

and  price  lists,   indicating  that  the  merchandise  is 

delivered   to    the    carrier    for    shipment,     without 

charges  for  cartage  or  boxing. 
Folio. — The  page  of  an  account  book. 
Footing. — The  amount  of  a  column  of  figures. 
Forced  Sales. — Sales  of  goods  under  price  because  of 

business  necessity. 
Foreclosure. — A  process  by  which  mortgaged  property 

is  sold  by  the  mortgagee  in  order  to  pay  the  debt 

secured. 
Forgery. — The  act  of  fraudulently  writing  or  altering  a 

written  document. 
Fraud. — Deception  practiced  for  the  purpose  of  gaining 

an  unfair  advantage. 
Free  Goods. — Goods  admitted  to  a  country  free  of  duty 
Free  Trade. — Commerce  between  nations  unrestricted 

by  duties  or  tariff  regulations. 
Freight. — Merchandise  being  transported.     The  price 

paid  for  transportation. 
Fund. — A  sum  of  money  set  aside  for  a  special  purpose. 
Funded. — Turned  into  a  permanent  debt  or  loan. 
Funds. — Ready  money. 


GAUGING. — The  process  of  measuring  the  contents 
of  casks. 

Goods. — A  term  synonomous  with'merchandise,  chattels, 
commodities. 

Good  Will. — The  reputation  and  patronage  that  per- 
tains to  an  established  business. 

Grace. — Favor.     See  Days  of  Grace. 

Gratuity. — A  free  gift. 

Greenbacks. — United  States  notes,  as  distinct  from  na- 
tional bank  notes. 

Gross  Weight. — Weight  of  merchandise  including  the 
case  or  wrapping. 

Guarantee,  or  Guaranty. — A  surety  for  the  perform- 
ance of  a  contract,  in  case  the  party  making  the 
contract  fails  to  keep  it.     A  >ec"':ity  against  loss. 


118 


ADVANCED  ACCOUNTING 


HIGHWAY. — A  road  which  every  one  has  the  right  to 
use. 
Honor. — To  accept  a  draft,  or  to  pay  it  when  due. 
House. — Another  word  for  firm. 


IMPORT. — To  bring  from  a  foreign  country.  The  ar- 
ticle brought. 

Indemnify. — To  make  good  for  injury  or  loss. 

Indemnity. — A  guarantee  against  loss  or  damage. 

Indenture. — A  mutual  agreement  in  writing  between 
two  or  more  parties. 

Indorse. — See  Endorse. 

Indorsement. — A  writing  on  the  back  of  any  commercial 
paper. 

Infringement. — To  trespass  upon  the  rights  of  another, 
especially  when  granted  some  special  right  by  law, 
such  as  a  copyright,  a  patent,  or  a  trade  mark. 

Injunction. — A  writ  or  process  by  which  a  party  is  re- 
quired to  do  or  to  refrain  from  doing  a  special  act. 

Insolvency. — Being  unable  to  pay  all  debts;  usually, 
synonomous  with  bankruptcy. 

Installment. — Part  of  a  sum  of  money  paid  or  to  be 
paid. 

Instant. — Referring  to  the  present  month;  as,  the  sixth 
instant  means  the  sixth  day  of  the  present  or  cur- 
rent month. 

Insurance. — A  contract  to  indemnify  one  in  case  of  loss. 

Internal  Revenue. — That  part  of  our  government  rev- 
enue which  is  collected  as  internal  duties  or  taxes. 

Interest. — A  certain  percentage  paid  by  the  debtor  to 
the  creditor  for  the  use  of  money.  A  share  in  any 
business. 

Intestate. — Dying  without  having  made  a  will. 

Inventory. — An  itemized  list  of  goods  with  their  prices 
and  amount. 

Investment. — The  laying  out  of  money  in  the  purchase 
of  property. 

Invoice. — An  itemized  bill  of  merchandise  bought,  sold 
or  shipped. 

JOBBER. — One  who  buys  from  importers  and  manu- 
facturers, and  sells  to  retailers. 

Jobi  Lots. — Remnants  and  broken  assortments  of  mer- 
chandise sold  in  lots  under  regular  prices. 

Joint  Stock. — Property  held  in  common  by  a  company 
of  men,  each  of  whom  is  called  a  stockholder. 

Journal. — A  book  used  to  prepare  entries  for  the  ledger. 

Journalizing. — Entering  records  in  the  journal. 

Judgment. — The  decree  of  a  court  enforcing  a  contract 
or  redressing  a  wrong. 

Junior  Partner. — The  youngest  member  of  a  firm. 

LANDLORD. — One  who  owns  real  estate  and  leases  it 
to  another. 

Larceny. — The  taking  of  personal  property  unlawfully. 
Theft. 

Lease. — The  letting  of  land  and  other  property  for  hire. 
The  contract  for  such  letting,  usually  written,  but 
sometimes  verbal. 

Ledger. — The  book  of  accounts  to  which  all  of  the 
records  are  finally  carried 

Legacy. — A  gift  of  property  by  will. 

Legal  Tender. — That  kind  of  money  which  legally  can 
be  offered  in  payment  of  a  debt. 

Letter  of  Credit. — A  letter,  usually  addressed  to  bank- 
ing houses  in  foreign  cities,  authorizing  the  holder 
to  receive  credit  for  a  stated  amount. 

Liability. — Any  debt  owed  by  a  person. 

License. — A  legal  permit  to  do  a  certain  thing. 

Lien. — A  legal  claim  on  any  class  of  property  to  secure 
payment  of  a  debt. 

Liquidate. — To  pay  or  settle  a  claim. 

Loan. — To  lend  to  another  for  temporary  use.  The  ar- 
ticle lent 


MAKER. 


-The  signer  of  a  note. 


Manifest. — A  list  of  the  articles  in  a  vessel's  cargo. 

Manufacture. — The  process  of  changing  raw  materials 
into  forms  suitable  for  use. 

Marine. — Pertaining  to  the  ocean;  hence,  to  navigation. 

Maturity. — The  date  when  commercial' paper  becomes 
payable. 

Merchandise. — Wares,  goods,  commodities  bought  and 
sold  in  trade. 

Mercantile  Agency. — An  agency  established  to  collect 
and  disseminate  information  relative  to  the  financial 
standing  of  business  men. 

Mercantile  Paper. — Notes  and  drafts  of  business  men. 

Mint. — A  place  established  by  the  government  for  the 
purpose  of  coining  money. 

Monetary. — Pertaining  to  money. 

Money. — Any  coin  or  currency  lawfully  employed  as  a 
representative  of  value  in  buying  and  selling. 

Monopoly. — The  sole  right  to  make  or  sell  a  certain  ar- 
ticle.    The  exclusive  control  of  anything. 

Mortgage.  —The  written  pledge  of  real  estate  or  chattels 
to  secure  payment  of  a  debt. 

Mortgagee. — One  to  whom  a  mortgage  is  given. 

Mortgager,  or  Mortgageor. — One  who  gives  the  mort- 
gage. 

NEGOTIABLE. — A  term  applying  to  commercial  pa- 
per, that  may.be  transferred  by  endorsement,  or 
simply  by  delivery. 

Negotiate. — To  transact  business,  or  treat  with  another. 

Net. — Clear  of  all  charges.  The  exact  weight  or  amount 
after  all  deductions  are  counted  out. 

Net  Proceeds. — The  proceeds  of  a  sale  after  all  ex- 
penses are  deducted. 

Notary,  or  Notary  Public. — An  officer  who  acknowl- 
edges deeds  and  other  commercial  papers;  but 
whose  chief  business  is  to  protest  paper  for  non-ac- 
ceptance and  non-payment. 

Note. — A  written  or  printed  promise  to  pay,  without  seal. 

OPEN  ACCOUNT. — An  unsettled  account  with  a  per- 
son or  a  firm. 

Open  Policy. — One  intended  to  cover  all  goods  shipped 
by  a  person  within  a  specified  time;  each  special  ship- 
ment and  the  amounts  of  insurance  to  be  indorsed 
upon  the  policy,  as  the  shipments  are  made. 

Option. — The  privilege  of  taking  or  delivering,  that  is, 
buying  or  selling  a  certain  amount  of  any  specified 
property  at  a  given  price. 

Outlawed. — A  term  applied  to  a  debt  which  has  run  be- 
yond the  time  when  the  law  will  enforce  its  pay- 
ment. 

Outstanding. — Referring  to  debts  or  liabilities  unpaid 

Overdraw. — To  draw  a  greater  sum  than  one  has  to  his 
credit. 

Overdue. — A  term  referring  to  a  note  or  other  obligation 
that  remains  unpaid  after  it  is  due. 

Owe. — To  be  indebted. 

PAR. — Equal  in  value.  Any  paper  is  at  par  when  it  is 
worth  its  face  value,  without  premium  or  discount. 

Parol. — Oral,  not  written.  Also  applied  to  written  con- 
tracts not  under  seal. 

Partner. — An  associate   in  any  business  or  occupation. 

Partnership. — The  association  together  of  two  or  mora 
persons  for  the  purpose  of  conducting  any  business. 

Par  Value.— The  nominal  value;  usually  the  printed  or 
written  value  of  any  paper. 

Pass-Book. — A  book  in  which  a  trader  enters  articles 
bought  on  credit.  It  is  usually  carried  by  the  pur- 
chaser, and  is  presented  for  record  when  the  pur- 
chases are  made. 

Patent. — An'official'document  securing  to  a  person  for 
a  term  of  years,  the  exclusive  right  to  an  invention. 


MERCANTILE  TERMS 


119 


Pawn  —  A  deposit  or  pledge,  given  as  security  for  a  loan. 
Tie  term  only  applies  to  chattels  or  money,  and  not 
to  real  estate. 

Pawnbroker. — One  who  lends  money  on  pawns  or 
pledges. 

Pay. — To  discharge  a  debtor  obligation.  An  equivalent 
for  goods,  salary,  or  wages. 

Payee. — The  one  to  whom  payment  is  to  be  made; 
especially  in  whose  favor  a  paper  is  drawn. 

Payer. — The  one  who  pays,  or  is  under  obligations  to 
pay. 

Personal  Property. — All  property  except  real  estate; 
chattels. 

Plaintiff. — One  who  brings  a  personal  action  in  law 
against  another  party,  who  is  called  the  defendant. 

Pledge. — The  delivery  of  personal  property  as  security 
for  a  debt. 

Policy. — A  written  contract  of  insurance. 

Politic. — Prudent,  sagacious.  In  a  broader  sense,  for 
the  public  good. 

Posting. — Transferring  debits  and  credits  to  the  ledger. 

Power  of  Attorney. — A'  written  instrument  giving  an 
agent  authority  to  act  for  his  principal.  An  agent 
thus  empowered  is  called  an  Attorney  in  Fact. 

Preferred  Stock. — Stock  taking  preference  over  the  or- 
dinary stock  of  c  corporation.  A  dividend  is  de- 
clared and  paid  on  preferred  stock  before  any  can 
be  declared  on  com    on  stock. 

Premises. — A  term  applied  to  any  piece  of  real  estate,  or 
to  a  building  and  its  appurtenanees. 

Premium. — The  amount  paid  for  insurance.  The  excess 
of  any  value  above  par. 

Price. — The  v  due  >f  an  article.  The  amount  paid  or 
demanded  for  any  commodity  in  trade. 

Price  Current. — A  table  of  the  market  values  of  various 
commodities. 

Prima  Facie. — At  first  view.  Prima  facie  evidence  is 
that  evidence  which  is  sufficient  unless  rebutted. 

Principal. — The  one  e  ploying  an  agent  to  act  for  him. 
The  sum  loaned  upon  which   Interest  is  computed. 

Promissory,  Note. — A  written  promise  to  pay  a  certain 
sum  of  money  unconditionally,  at  a  specified  time. 

Pro  Rata. — A  proportional  distribution. 

Protective  Tariff. — Rates  of  duty  fixed  on  certain  im- 
ported commodities,  for  the  protection  of  home 
manufacturers. 

Protest, — A  formal  declaration  made  by  a  notary  pub- 
lic, of  the  non-payment  of  a  note,  or  non-accept- 
ance and  non-payment  of  a  draft. 

QUARANTINE.— Restraint  of  intercourse   to  which 
a  ship,  dwelling  or  town  is  subjected,  on  account 
"of  being  infected  with  some  contagious  disease. 
Quotations. — The   published    prices    of  merchandise, 
rates  of  freight,  rates  of  exchange,  etc. 

DATE.— The  price  or  value. 

Ratify. — To  sanction  or  approve;  usually  applied  to  a 
principal's  approval  of  an  agent's  transactions. 

Real  Estate. — Land,  and  everything  that  legally  passes 
with  it  in  a  conveyance  or  sale. 

Rebate. — Deduction  from  the  price.     Discount. 

Receipt. — A  written  acknowledgment  of  having  re- 
ceived money  or  other  property. 

Receiver. — A  person  appointed  to  take  charge  of  the  af- 
fairs of  a  corporation  on  its  dissolution,  and  to  dis- 
tribute its  property  according  to  law. 

Refund. — To  repay  or  to  pay  back. 

Remittance. — The  act  of  transmitting  money  values 
from  one  place  tp  another.  The  value  sent  is  called 
a  remittance. 

Renewal. — As  applied  to  commercial  paper,  to  give  a 
new  note  or  bill  on  which  the  time  of  payment  is 
extended,  for  a  papei  now  due. 

Rent. — Money  or  goods  given  by  a  tenant  to  his  land- 
lord, to  pay  for  the  usff  of  property. 


Responsible.— Liable.  Having  sufficient  property  to 
meet  all  ordinary  obligations. 

Resources. — Money,  property,  or  that  which  can  be 
converted  into  property;  as,  claims  against  other 
people,  either  on  written  or  verbal  promises. 

Retail. — To  sell  in  small  quantities. 

Revenue. — The  income  of  individual  or  nation.  As  ap- 
plied to  a  nation,  its  receipts  into  the  treasury,  de- 
rived from  taxes,  duties,  customs,  etc. 

Revocation. — The  recall  of  authority  conferred  on  an- 
other; as,  the  revocation  of  an  agency. 

Right  of  Way. — The  right  of  an  individual  or  corpora- 
tion to  pass  over  the  land  belonging  to  another  per- 
son. 

SALE. — The  transfer  of  property  from  one  person  to 
another,  for  a  price. 
Salvage. — An  allowance  made  by  law  to  those  who  save 

a  ship's  cargo  from  a  wreck  or  fire. 
Sample. — A  specimen  of  any  commodity. 
Schedule. — A  paper  containing  a  list  or  inventory  of 

items. 
Security. — An  evidence  of  debt;  as,  a  government  bond. 
,  A  pledge  given  or   something  deposited  to  make 

good  a  contract.     A  person  who  becomes  surety  for 

another. 
Set-off. — A  counter  claim.     A  claim  which  the  debtoi 

or  defendant  brings  to  reduce  the  claim  of  a  creditor 

or  plaintiff. 
Settle. — To  adjust  or  close  up  an  account. 
Shareholder. — The  same  as  stockholder. 
Shipment. — Merchandise  shipped.     The   act  of   trans- 
porting merchandise. 
Shipper. — One    who  leaves   merchandise  with  another 

for  transportation. 
Sight. — The  time  of  presenting  a  draft  or  bill  to  the 

drawee. 
Sight  Draft. — A  draft  made  payable  at  sight. 
Signature. — The  name  of  a  person  written  with  his  owp 

hand. 
Silent  Partner. — A  partner  investing  in  the  business, 

but  not  publicly  named  in  the  firm. 
Sinking  Fund. — A  fund  set  aside  for  sinking  or  paying 

the  debts  of  the  government,  or  of  a  corporation. 
Solvent. — Being  able  to  pay  one's  liabilities. 
Staples. — Articles  commonly  used;  as,  staple  dry  goods 

and  groceries. 
Statement. — A  list  of  resources  and  liabilities.    A  re- 
port of  an  agent's  transactions  sent  to  his  principal. 

An  itemized  list  of  ths  debits  and  credits  of  any 

personal  account;  as,  monthly  statements  sent  by 

wholesale  dealers  to  their  customers. 
Statistics. — A  collection  of  facts  pertaining  to  any  one 

subject. 
Statute. — A  law  enacted  by  a  legislature. 
Stipulation.  —A  contract  or  an  agreement. 
Stock  Exchange. — A  place  where  bankers  and  broker* 

meet  to  buy  and  sell  stocks,  bonds,  etc. 
Stockholder. — One  who  owns  shares  of  the  capital 

stock  of  a  corporation. 
Stock. — Shares  in  the  stock  of  any   corporation;  also, 

railroad  or  government  securities. 
Sub-Agent. — An  agent  appointed  by  an  agent. 
Sue. — To  bring  an  action  against  one  in  law. 
Surety. — A  person  who  has  made  himself  responsible 

for  the  contract  of  another. 
Suspend. — To  stop  payment. 
Syndicate. — A  number  of  capitalists  who  unite  together 

to  dispose  of  a  large  loan,  or  to  conduct  some  great 

financial  enterprise. 


T 


ACIT. — That  which  is  understood  or  implied. 


Tare. — An  allowance  madeifor  the  weight  of  boxes,  bar- 
rels, or  wrappings  of  merchandise.     The  remainder 
after  deducting  the  tare  is  called  net  weight. 


120 


ADVANCED  ACCOUNTING 


Tariff. — A  list  of  prices;  as,  a  freight  tariff .  A  list  of 
duties  or  customs  on  imports  or  exports. 

Teller. — One  who  receives  or  counts.  A  bank  officer 
who  receives  or  pays  out  money . 

Tender. — The  offer  of  payment  or  satisfaction  of  a  de- 
mand, usually  the  offer  of  legal  money,  called  a 
legal  tender,  for  the  payment  of  a  debt. 

Tenement. — Any  real  estate  leased  to  a  tenant.  Applied 
especially  to  houses  built  for  rent. 

Testator. — A  person  who  has  made  a  will. 

Tickler. — A  book  containing  a  memorandum  of  notes 
and  debts,  arranged  in  the  order  of  their  maturity. 

Time  Draft. — A  draft  made  payable  at  a  specified  time; 
usually  a  certain  period  after  dat^,  or  after  sight. 

Trade  Discount. — A  discount  from  certain  list  prices, 
or  from  the  amount  of  purchases,  made  to  a  dealer 
on  account  of  a  change  in  the  prices,  o>  on  account 
of  cash  payments. 

Trade  Mark. — A  device  placed  upon  manufactured 
goods  to  distinguish  them  from  i.  itations. 

Transfer. — A  conveyance  of  property. 

Trust. — The  holding  of  property  by  one  for  the  benefit 
of  another.     To  give  credit  to  one. 

Trustee. — A  person  to  whom  property  is  legally  en- 
trusted. 

ULTIMO. — The  last  month  preceding  the  present;  as, 
on  the  twentieth  ultimo,  meaning  the  twentieth  of 
last  month. 


Uncurrent. — A  term  applied  to  money  that  does  ncfc 
pass  in  common  payment.  Foreign  coins  are  un« 
current  in  the  United  States. 

Underwiters. — Companies  who  insure  against  loss. 

Usuance. — The  time  usually  allowed  in  a  particular 
country  or  city,  for  the  payment  of  a  bill  of  ex- 
change. 

Usury. — Interest  in  excess  of  the  highest  rate  allowed 
by  law. 

VALID. — A  term  applied  to  a  contract  thai  is  properly 
executed;  that  is,  legal  or  binding. 
Void. — Having  no  legal  or  binding  force. 
Voidable. — Capable  of  being  avoided  or  confirmed,  as 

the  party  chooses. 
Voucher. — A  document   or   paper   proving  that  some 
transaction  occurred;  as,  a  receipt  or  a  cancelled 
note  is  a  voucher  for  the  payment  of  money. 

WARRANT. — To  insure  against  defects.     Authority 
given  to  an  officer  to  arrest  a  person.     A  writing 
authorizing  the  holder  to  receive  money. 
Warranty. — An  agreement  to  become  responsible,    if 

certain  facts  do  not  turn  out  as  represented. 
Way-Bill. — A  paper  containing  a  list  and  description  ol 
goods  sent  by  railroad.  i 

Wholesale. — To  sell  goods  in  quantity;  usually,  in  un- 
broken or  whole  packages. 


ABBREVIATIONS. 


A  1 First  Quality 

@ At 

Acct Account 

Adv Adventure 

Agt Agent 

Amt Amount 

Ans Answer 

Apr April 

Art Article 

Asstd Assorted 

Aug August 

Bal Balance 

Bbl.  or  Brl Barrel 

B.  B Bill  Book 

Bdls Bundles 

Bds Boards 

Bgs Bags 

Bk Bank 

Blk Black 

Bis Bales 

Bot Bought 

B.  Pay Bills  Payable 

B.Rec. Bills  Receivable 

Bro Brown 

Brot Brought 

Bu Bushel 

C. Hundred 

Cap Capital 

C.  B Cash  Book 

Chgd Charged 

Ck Check 

co {c°™tyny 

C.O.D Collect  on 

Delivery 

Col Collection 

Com Commission 

Const Consignment 


Cr Creditor 

Cts Cents 

Cs.  Cciscs 

C  wt  .V.Vh  undVed  Weight 

D.  B Day  Book 

Dec December 

Dep Deposit 

Dft Draft 

Dis Discount 

Do.... (Ditto)  The  Same 

Doz Dozen 

Dr ,.__Debtor 

Ds Days 

Ea Each 

E.E Errors  Excepted 

Em  bd Embroidered 

Eng English 

Ex Example 

Exch Exchange 

Exp Expense 

Fav Favor 

Feb February 

Figd Figured 

F.  orFol Folio 

Ford Forward 

Frt Freight 

Ft .Foot  or  Feet 

Gal Gallon 

Gdn Guardian 

Gro. Gross 

Hdkf Handkerchief 

Hhd Hogshead 

Hund Hundred 

I.  B Invoice  Book 


i.  e {id  est)  That  is 

In Inches 

Ins Insurance 

Inst --^{Instant) 

Present  Month 

Int Interest 

Inv Invoice 

Invt Inventory 

Jan January 

J Journal 

J.  F Journal  Folio 

lb Pound  or  Pounds 

Iy.  F.__ Ledger  Folio 

M Thousand 

Mar March 

Mdse Merchandise 

Mem Memorandum 

Messrs Gentlemen 

or  Sirs 

Mf  tg Manufacturing 

Mo Month 

Mr Mister 

Mrs Mistress 

Nat National 

N.  B Take  Notice 

No Number 

Nov November 

Oct October 

oz. Ounce 

P Page 

Payt Payment 

Pd Paid 

Per By 

Pkg. Package 


P.  O PostOffice 

Pr Pair 

Prem Premium 

Prox. {Proximo) 

Next  Month 

Pc Piece 

Ps Pieces 

Pt Pint 

Qr Quarter 

Qt Quart 

Reed Received 

R.  R Rail  Road 

S.  B Sales  Book 

Sec Secretary 

Sept __  September 

Shipt '...Shipment 

St Street 

Sunds Sundries 

Super Superfine 

T , Ton 

Trati «    /  Transportation 
lrans-i  Transaction 

Ult {Ultimo) 

Last  Month 

Via By  way  of 

Viz Namely 

Vs. {versus)  Against 

W.  B Way  Bill 

Wk Week 

Wt .....Weight 

Yds Yards 

Yr . Year 


YE  06&59 


4C2229 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


